March 6, 2018 3:15 PM, EST

Daimler Says Future Deals With Geely Hinge on China Partner BAIC

Krisztian Bocsi/Bloomberg

Daimler AG said future collaboration with its new largest shareholder Li Shufu will hinge on keeping the manufacturer’s existing Chinese partner on board.

Li, whose holdings include Sweden’s Volvo cars and China’s Geely brands, last month emerged with a 9.7% holding in the world’s biggest luxury carmaker. The Chinese billionaire held initial talks with Daimler Chief Executive Dieter Zetsche, discussing the potential to work together to solve some of the challenges in the shift to electric, self-driving cars, Zetsche told reporters at the Geneva International Motor Show March 6.

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Cooperation will require a tightrope act to keep Daimler’s existing Chinese partners, BAIC Motor Corp. and BYD Co., on board. At Audi, a dispute over a second partnership soured relations with dealers last year, leading to a slump in sales in the world’s biggest car market.

“It was a good conversation with a very successful entrepreneur,” and Li “confirmed his positive view of our company,” Zetsche said.

Li’s move may revive Beijing-based BAIC Motor Corp.’s earlier interest in acquiring a holding in Daimler, Zetsche said.

The 54-year-old entrepreneur’s investment in Stuttgart-based Daimler was the largest yet by a Chinese company in Germany, and the biggest stake in any global automaker. Li also owns Swedish manufacturer Volvo Car AB, whose CEO said at the show that he’s keeping a distance from Mercedes-Benz owner Daimler because they’re competitors. The Chinese billionaire’s other recent automotive-industry purchases include control of British sports-car maker Lotus Cars Ltd. and the biggest stake in truck producer Volvo AB, the former owner of the Swedish auto brand.

BAIC and Mercedes will cooperate on building their fifth car in China this year, and they’re set to work jointly on an electric crossover under the German company’s EQ nameplate to come out in 2020. Daimler is also in talks with potential partners on expanding its Car2Go car-sharing business in the country.