Mercedes-Benz and NIO are exploring an EV tech partnership, report says

Another German automaker may be looking to China for electric vehicle tech. A new report claims that Mercedes-Benz and NIO have discussed a potential EV tech partnership.

The report from Reuters states two people familiar with direct knowledge of the matter claim the automakers have had “exploratory talks” where Mercedes-Benz would invest in Chinese EV maker NIO to access its technology.

William Li, NIO’s founder, and Mercedes-Benz CEO Ola Kaellenius discussed a potential partnership earlier this year.

While NIO looks to improve its financial situation, Mercedes could benefit from sharing tech and resources with the pioneering EV maker.

The sources say discussions did not get as far as which technology would be exchanged and if or how much funds would be invested. One source said NIO was the one that approached Mercedes but faced resistance from internal discussions within the German automaker and that it was “highly likely it would not proceed.”

NIO reportedly denied the claims, saying it was “untrue.” Although Mercedes noted there were no current plans to collaborate, they said, “Ola Kaellenius is in an ongoing regular dialogue with various industry leaders and peers, including William Li.”

Is a Mercedes-Benz, NIO EV tech partnership coming?

The sources said Mercedes’ R&D and strategy teams largely opposed the partnership, saying it could damage the brand’s image.

There could also be a conflict of interest with Chinese investors, including BAIC Group and Li Shufu, being the two largest Mercedes shareholders.

Meanwhile, Mercedes-Benz wants to accelerate EV sales in China to improve market share. NIO, which ranks ninth among EV and hybrid automakers in China, aims to develop in-house components like batteries and chips.

More recently, NIO launched its first smartphone, a move that many analysts argue could stretch the EV maker too thin. NIO’s vehicle sales, revenue, and gross margins all fell in the second quarter as NIO transitioned its vehicles to its next-gen platform.

NIO’s losses reached $835.1 million in Q2, up nearly 120% from last year. The climbing losses come amid an ongoing price war in China, where NIO cut prices in June.

Despite the hurdles, NIO’s Li expects “solid growth in vehicle deliveries in the second half of 2023.” The EV maker launched several new models over the past few months, including the new ES6, EC6, and ET5 Touring electric station wagon.

NIO ended the quarter with about $1.8 billion in cash and equivalents (excluding restricted cash, investments, receivables, and inventory), down from around $2.7 billion at the end of 2022.

Electrek’s Take

Although NIO is denying the claims, it could be mutually beneficial. Mercedes is reportedly already looking to China’s BYD to power new EVs with its Blade batteries to reduce costs and better compete with automakers like Tesla in the region.

With NIO’s ambitious expansion plans, including software and hardware, it could use a solid financial backer. The EV maker is trying to navigate a price war in its home market while expanding into overseas markets with new models.

Another German automaker, Volkswagen, invested $700 million into China’s XPeng for a nearly 5% stake to develop new models.

Will Mercedes-Benz and NIO be the next German-Chinese EV tech tie-up? What do you guys think? Let us know in the comments. We’ll keep you updated with the latest on the situation.