Mercedes-Benz parent company Daimler AG has unexpectedly sold its four per cent stake in “bold partner” Tesla for about US$780 million ($890m), but will retain its collaboration with the Silicon Valley brand.
The cash injection will be pumped into Daimler’s operational business. The company says it will continue to source EV powertrains for the Mercedes-Benz B-Class Electric Drive, which is on sale in the US and soon will be in Europe, from Tesla.
Mercedes-Benz has previously sourced batteries for its Smart Fortwo electric drive from Tesla.
The move this week to sell off its shares is unexpected. In December last year, Daimler initiated an Equity Collar (a way of hedging its position) of three years, making it less prone to the volatility of Tesla's share price. The term instead lasted 10 months.
Tesla shares are trading at around $230 on the NASDAQ, up from about $150 at the start of the year. Such success evidently prompted Daimler to cash in on its hot property, which remains prone to marked swings in the aftermath of any announcements from company chief Elon Musk.
Tesla recently revealed a new all-wheel-drive system as well as a suite of autonomous driving technologies for its new Autopilot system on the Model S. The company is also building a so-called 'gigafactory' in Nevada that will produce as many as 500,000 electric car battery packs a year by 2020, in-turn slashing the cost of EVs through greater economies of scale.
Following the announcement, Daimler AG chairman of the board of management and head of Mercedes-Benz Cars Dieter Zetsche said: “Our partnership with Tesla is very successful and will be continued.”
“In Tesla we do have a bold partner,” he later added. “Together we launched the B-Class Electric Drive successfully in the United States this summer. In November, the B-Class Electric Drive will be launched in Europe as well. We are convinced that this powerful electric vehicle for everyday use will appeal to a lot of customers.”
In addition to its collaborations with Tesla, Daimler AG in recent times has embarked on a wide-ranging collaboration with the Renault-Nissan Alliance, with each party sharing technologies to reduce research and development outlays.
Member of the Daimler AG board of management for finance and controlling and financial services Bodo Uebber said the company was “extremely satisfied with the development of our investment in Tesla”, but added that “it is not necessary for our partnership and cooperation”.
“For this reason, we have decided to divest of our shares. This will also allow Tesla to broaden its investor base.”
Daimler was a big early investor in the now red-hot Silicon Valley start-up. In May 2009 it acquired 9.1 per cent but transferred 40 per cent of this shortly after. Tesla’s capital increases reduced the German company’s share to the now-sold four per cent.
“We have supported Tesla as a start-up company for many years and have learned a lot from Tesla. At the same time, Tesla was able to profit from our automotive expertise,” said member of the board of management of Daimler AG for group research and Mercedes-Benz Cars development Thomas Weber.
Daimler AG has what it claims to be the industry’s biggest portfolio of electrified and fuel-cell vehicles, from cars and vans to buses and light trucks.
These include the Smart electric drive, Mercedes-Benz A-Class E-CELL, B-Class Electric Drive, B-Class F-CELL, SLS AMG Coupe Electric Drive, Vito E-CELL, Mercedes-Benz Citaro FuelCELL-Hybrid, Fuso Canter E-CELL and Freightliner Custom Chassis MT E-CELL All-Electric.
In 2014, Mercedes-Benz sold more automobiles with hybrid drive than all other German manufacturers combined. The focus will continue to be on plug-in hybrids in the coming years. By the year 2017, Mercedes-Benz Cars will launch 10 new plug-in hybrid models.
News of Daimler’s stock sell-off comes as the governor of US stage Michigan — home of motor city Detroit — signed a measure blocking Tesla from selling cars directly to buyers in the state, siding with dealer groups and OEMs such as General Motors.
The signing strengthened existing laws that require car makers to sell vehicles through a dealer network, which is in contrast to Tesla’s direct-sales method through its own ‘Tesla Stores’. As such, if Tesla wants to sell cars in Michigan, it must appoint third-party dealers.