Daimler-BYD EV Will Appear in Spring

Just the Facts:

• Daimler boss Dieter Zetsche says the design of the electric car being developed with Chinese partner BYD "is frozen, and the first prototype will appear next April."
• Zetsche says Daimler elected not to develop an EV with another Chinese partner, Beijing Auto, because "they have no battery technology, so it was better to do this with BYD."
• Despite BYD's reputation as an expert in batteries and EVs, Zetsche says it's Daimler rather than BYD that is doing most of the development work on the new joint-venture car for China.

STUTTGART, Germany — Daimler's plans to develop a new car brand for China in collaboration with local partner BYD are "on track," according to Daimler boss Dieter Zetsche, who met last week with BYD Chairman Wang Chuanfu. The design of the first electric car from the joint venture "is frozen, and the first prototype will appear next April.".

As Zetsche says, at one point Wang appeared to be a man "who could walk on water — which he can't." Since the agreement was signed, BYD has faced "potholes" with both its car and mobile phone businesses, says Zetsche, leading some commentators to suggest that Wang is a bad manager, "which is not true either."

BYD recently was forced to lay off thousands of employees. The Chinese automaker, based in Shenzhen, has scaled back plans that nevertheless remain ambitious, while admitting that it has made policy mistakes as far back as 2009.

BYD has long been thought to hold the key to a breakthrough battery technology, but when asked if this is true, Zetsche simply says, "no." Not only that, but it's Mercedes rather than BYD that is doing most of the development work on the new car.

So why is Zetsche keen to link with this Chinese business? "We're very confident about this company," he says.

One reason is the support that the Chinese government has been providing for the electric-car market, with domestically produced models qualifying for a $9,200 subsidy from the state, and in five major cities another $9,200 on top of that, making electric cars very cheap and the market potential substantial.

But Zetsche also says that "it's short-sighted to go to China, make money and run. There needs to be give and take. BYD was so positively rated that we wanted to co-develop alternative-energy vehicles with them — it's better to be proactive. We could have done this with BAIC (Beijing Auto, another Chinese JV partner), but they have no battery technology, so it was better to do this with BYD."

Inside Line says: As the Daimler-BYD electric car nears its spring introduction, government support for EVs in China may be slowing down as the nation's political leaders rethink their long-range green strategies.