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Mercedes-Benz to buy 3% stake in Chinese battery manufacturer Farasis Energy

Highlights

Multi-million euro amount to be invested at Farasis' IPO

Strategic partnership also formed to secure battery cell supply

Both part of Mercedes-Benz's goal of reaching CO2 neutrality by 2039

Mercedes-Benz is set to buy a 3% equity stake in Chinese battery cell manufacturer Farasis Energy, with which it has also launched a strategic partnership, the automaker's owner Daimler said July 3.

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The stake and strategic partnership is part of Mercedes-Benz's goal of reaching CO2 neutrality by 2039.

While Daimler did not provide the amount to be paid for the stake, it said Daimler Greater China was "investing a multi-million euro amount" as part of Farasis' upcoming initial public offering.

Farasis received approval in May to raise about Yuan 3.4 billion ($490 million) in an IPO on the Shanghai Stock Exchange's STAR market.

Under the strategic partnership agreement, the two companies will collaborate in the development and industrialization of "highly advanced" cell technologies, as well as aim for cost competitiveness.

"The technological focus is on significant increases in range through advances in energy density and the reduction of charging times," Daimler said.

The partnership gives Mercedes-Benz a secure source of supply of battery cells for its electrification strategy and Farasis security for its planned construction of production capacity.

Farasis, which currently runs two production plants in Ganzhou and Zhenjiang, is building a carbon-neutral plant for battery cells in Bitterfeld-Wolfen, east Germany to meet Mercedes-Benz's increasing demand in the future, creating up to 2,000 new jobs.

Hubertus Troska, Daimler board member responsible for Greater China, said the company was already working with strong and trusted partners in China to enhance Daimler's local footprint and strengthen its competitiveness worldwide, with China being the world's largest electric vehicle market.

"By taking a stake in a Chinese battery cell manufacturer for the first time, we will further leverage the potential of advanced technology partners in the market, enabling us to pursue our electric strategy globally," he said.

The equity stake will be subject to regulatory approvals and will allow Daimler to nominate a representative on the Farasis board, which will most likely be filled by Daimler and Mercedes-Benz board member Markus Schäfer, who is also responsible for Daimler Group Research and COO of Mercedes-Benz Cars.

Schäfer said the partnership was a step in the company's "electric first" strategy.

"By strategically expanding our business relationship, we are pushing the electrification of our model portfolio ahead. With this agreement, we contribute our expertise in the field of battery cell development. At the same time, we are providing a boost for Farasis's new plant and promoting the sustainable development of a key technology and its establishment in Germany," he said.