Geely mulls Daimler links to expand global reach

Move comes after firm turns largest shareholder in German carmaker with 9.69% stake

Hong-Kong listed Geely Automobile Holdings Ltd said on Monday it may cooperate with Mercedes-Benz owner Daimler AG, as its sibling Geely Group has become the largest shareholder in the German carmaker with a 9.69 percent stake.

"We do not exclude the possibility of seeking cooperation with Zhejiang Geely Holding Group and Daimler AG considering the benefits to us and our shareholders," said the carmaker, which produces Geely-branded cars, in a statement. The carmaker's stock surged on Monday, rising 6.49 percent to close at HK$25.45 ($3.25).

Both Geely Automobile and Geely Group are subsidiaries of Zhejiang Geely Holding Group owned by Li Shufu.

Compared with Geely Automobile's wording, Li was more direct. He said the group would discuss cooperation with Daimler, with a focus on digitalization, online services, electro-mobility and car-sharing.

"The investment will be meaningless if there is not cooperation," Chinese business news portal cnstock.com quoted Li as saying on Monday.

"Of course, any unilateral ideas will not work out. Our investment must be in favor of Daimler's development. Only win-win projects have future and vitality."

In a statement on Saturday, Li said that as more tech companies are challenging the global car industry, carmakers have to have friends, partners, and alliances.

"My investment in Daimler reflects this strategic vision ... I am particularly pleased to accompany Daimler on its way to becoming the world's leading electro-mobility provider."

Daimler said that it knows and appreciates Li as an especially knowledgeable Chinese entrepreneur with "clear vision for the future", with whom one can constructively discuss change in the industry.

But the German carmaker hopes to prevent him from obtaining a seat on the supervisory board, reported German newspaper Handelsblatt.

Some industry insiders said Daimler's technology is Li's primary motivation for this investment, because as early as 2015 Geely Automobile set targets for new energy vehicles to account for 90 percent of its sales by the end of the decade.

Of these, about two-thirds will come from hybrids and plug-in hybrids, with the remaining from electric vehicles.

Yale Zhang, managing director of Shanghai-based Automotive Foresight, argued that electric cars are one of the best picks for them to start their relationship, but Li's vision is very likely far bigger than technological cooperation.

"I don't think Geely currently needs something that you find in a Mercedes-Benz. Li is daring, and he may look for opportunities to expand his influence on Daimler's board but he will be very patient, as he has shown with Volvo."

Li purchased Volvo Cars from Ford in 2010 for $1.8 billion but he has allowed the Swedish carmaker to remain independent. But Geely Automobile has benefitted much from Volvo technologically to improve the design and quality of its cars.

Geely Automobile sold 1.24 million cars in 2017, up 63 percent year-on-year, becoming one of China's fastest-growing brands. In November 2017, it unveiled the first model from its new brand Lynk & CO, which is designed to take on international brands.