Abu Dhabi funding to boost Daimler's green car efforts

An Abu Dhabi investment fund is to take a 9.1 per cent share in German car giant Daimler with a view to jointly developing electric cars, it was announced yesterday.

Aabar Investments, an affiliate of the state-owned International Petroleum Investment Company, also wants to develop a training centre for engineers in Abu Dhabi to improve skills in the region and develop new materials for the car industry.

Precise details on how the two companies plan to co-operate remain sketchy, but the focus on developing low carbon vehicles is believed to be a key component of the deal.

Sheikh Khalifa bin Zayed Al Nahyan, the ruler of Abu Dhabi, is trying to diversify the state's economy away from its traditional reliance on oil and has launched a number of initiatives to help bolster its presence in emerging clean technologies, most notably through the high-profile Masdar zero carbon city and investment fund.

Low carbon vehicles is one area that Abu Dhabi's sovereign funds have not yet invested heavily in, preferring to focus on renewable energy and carbon capture, but the Daimler deal appears to plug a gap in its clean tech portfolio.

The company has invested heavily in electric vehicles and is currently trialling an electric version of its fuel-efficient Smart Car in London. It has pledged to launch its all electric model of the Smart Car in 2010 and follow that with the first electric version of its flagship Mercedes-Benz model later that year.

Dr. Dieter Zetsche, chairman of the board of management of Daimler AG, welcomed the fresh investment, which should also help the company resist any hostlie takeover bids.

"We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy. We look forward to working together to pursue joint strategic initiatives," he said.

In related news, Indian firm Tata Motors launched its ultra-cheap Nano car in Mumbai today. Tata said that the car had lower emissions than most two-wheel vehicles currently being manufactured in India. It will retail at around £1,400.