Who Is Tesla Motors Inc.'s Best Frenemy?
Tesla Motors has had a long-standing partnership with Daimler , the German automaker that lays claim to the Mercedes Benz brand. Going as far back as 2008, Daimler and Tesla have been collaborating on powertrain, battery, and charger development for the electric drives of Daimler subsidiary Smart's fortwo model. Development commenced in 2009, and the cohorts have played nicely together.
An interesting stake
Daimler has a history of relying on Tesla's technology for its electric fleet. From May 2009 through December 2012 Tesla provided Daimler with 2,700 battery packs and chargers. In 2010, the companies entered into an arrangement in which Tesla would develop and produce the battery pack and charger for Daimler's A-class electric vehicles, which were introduced to the European market in 2011. It's not only passenger cars that Daimler has entrusted Tesla to supply EV components for, it's also for the German company's electric delivery vans for its Freightliner affiliate.
Burning both ends
Upon completion of the Smart fortwo and A-Class EV-component development, production, and delivery, Tesla began to develop the full-electric power train for the B-Class Mercedes-Benz vehicle. This production agreement was entered into in July 2013. Tesla expects to complete a substantial portion of the agreed-upon development services early this year, and will commence production of the EV components soon after.
So what does this history tell us about Tesla's future? Daimler has already expressed its desire to expand its partnership with the electric-car maker. Bodo Uebber, Daimler's CFO, said that they are intent on finding new opportunities for cooperation with Tesla. Considering the potential Daimler sees in its next-generation compacts (the company views this market as crucial to its growth), there could be even greater partnership potential ahead.
It's not just bits and pieces
Sure, its one thing for Tesla to have a history of supplying components to one of its most prominent competitors, its another thing all together when you consider that -- along with relying on Tesla for power trains, batteries, and chargers -- Daimler also has a stake in Tesla. As of last year the German automaker beneficially owned 4,867,929 shares of Tesla's common stock. Having equity in the electric-car maker just goes to show how much Daimler believes in Tesla's mission and growth potential.
Tesla isn't going to go easy on its German partner, in fact its gunning for Daimler's market share in China. Combined with BMW, Daimler's Mercedes-Benz brand has a hold on about 70% of China's annual $40 billion high-end-vehicle market. Tesla is swooping in, building out its Supercharger network, opening its most popular store in Bejing, and offering its Model S at a fair price. Daimler will have to balance its reliance on Tesla with its need to compete with the electric-car maker in a market with huge growth potential.
Tesla and its investors have a lot to gain from its partnership with Daimler, from future development deals to competitive marketing strategy -- it's a win-win situation for everyone involved.
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The article Who Is Tesla Motors Inc.'s Best Frenemy? originally appeared on Fool.com.Leah Niu owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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