Daimler, Geely mull China as production hub for hybrid powertrains

FRANKFURT — Daimler and Geely on Friday said China could emerge as a manufacturing and export hub for hybrid powertrains jointly developed for Volvo and Mercedes-Benz cars.

Earlier this week, Daimler said it would cooperate with China's Geely to build next-generation combustion engines for use in hybrid vehicles. The engines will be produced in China as well as in Europe, and Geely and Daimler will cooperate in engineering, sourcing and production, the companies said in a joint press release.

"The export of the engine from China is considered to be an option," the release further said.

Mercedes-Benz aims for more than half of its passenger car sales to be comprised of plug-in hybrids or purely electric vehicles by 2030.

Geely is China’s most internationally known automaker. It owns Volvo Cars and Lotus, almost half of Proton and 9.7% of Daimler. Through wholly owned company Polestar, it builds low-volume Polestar 1 hybrid performance cars in the western city of Chengdu and Polestar 2 volume sedans in Taizhou in the east.

"The companies plan to develop a highly efficient modular engine," a spokesman for Daimler said, adding that it would be used in hybrid drivetrains and manufactured in Europe and China.

The modular engine will be used in cars under different marques at Geely and Daimler, a person familiar with the matter said on condition of anonymity as the companies are still in the early stages of developing the engine.

An Conghui, President of Geely Holding Group, President and CEO of Geely Auto Group said: “This project reflects the need for economies of scale and targeted research and development investment in clean and highly efficient powertrains and hybrid drive systems and their applications."

Geely also plans to build a plant with annual manufacturing capacity of 30,000 premium EVs in the western city of Chongqing, run by a wholly owned, newly registered company, according to documents on its website. Geely and Polestar declined to comment. The plan comes as foreign automakers including BMW AG and Tesla expand EV production in the world’s biggest market, sourcing major EV components such as batteries locally and often even exporting a portion of the vehicles it builds.