Daimler and BYD team up in electric car alliance

Automotive giant Daimler has this week teamed up with rechargeable battery and electric car specialist BYD to develop a new electric vehicle specifically aimed at the largely untapped but potentially lucrative Chinese car market.

The deal will lead to the creation of a joint technology centre in China to develop, design and test a new consumer-focused four-door electric sedan. The vehicle will be marketed under a new brand name created and owned by both organisations, although no delivery date was specified.

"Electric vehicles are especially well-suited for urban driving," the two companies said in a joint statement. "With its many metropolitan areas, China has the potential to be among the world's largest markets for zero-emission vehicles. Daimler and BYD will accelerate the growth of electric mobility in China."

Daimler is fast emerging as one of the leading players in the emerging electric vehicle market. The company is currently piloting an electric version of its Smart city car and plans to introduce an all-electric version of the Mercedes-Benz A-Class vehicle later this year. It also acquired a 10 per cent stake in high-profile electric sport car manufacturer Tesla Motors last year.

Meanwhile, BYD, which stands for Build Your Dreams, has similarly made waves in the electric vehicle market, winning the race to launch the world's first mass-produced plug-in hybrid car, the F3DM, in December 2008. The company, which sold a 10 per cent stake to billionaire entrepreneur Warren Buffet's company Berkshire Hathaway back in 2008, has stated that it intends to become one of the world's largest auto firms over the next decade and is currently preparing to launch its first all electric vehicle, the e6, by the end of the year.

The alliance appears to benefit both companies, with Daimler gaining a route into the Chinese market and BYD securing the backing of a recognised name in the luxury vehicle market.

The move also comes at an opportune time, with the Chinese government planning to invest £20bn over the next two years in developing and promoting demand for alternative fuel vehicles, including offering cash rebates to buyers of electric cars and buses in 13 of its largest cities.

A purchaser of a small urban electric car could expect a rebate of about £5,000, while firms purchasing fuel-cell buses could receive up to £60,000 off the price.