Daimler Forms Ride-hailing Venture with Geely

Carmakers Daimler AG and Geely Group announced on Wednesday their plans to set up a ride-hailing joint business in China, marking their first collaboration since the Chinese firm purchased a significant stake in the German company this year.

An alliance between the two companies has been expected ever since Geely Chairman Li Shufu bought a 9.7 percent stake in Daimler in February, becoming the Stuttgart-based group’s largest shareholder. Geely also owns Swedish luxury automaker Volvo Car Group.

However, Geely’s investment has rekindled concerns in the German government about its vital expertise being obtained by China. Daimler originally hesitated at the option of a broad based partnership; partly due to worry over alienating Mercedes’ existing Chinese partner BAIC Group.

Since acquiring the stake in the German carmaker, Shufu has held several talks with Daimler Chief Executive Dieter Zetsche.

Zetsche has said any projects between the companies must be win-win situations, and must not disrupt Daimler’s partnerships in China with BAIC and BYD Auto Co. Ltd. Launching a ride-hailing service enables the automakers to work together without affecting on existing arrangements.

As part of the JV, Geely Group Company and Daimler Mobility Services will be equally represented on the board of the new ride-hailing business, for which the two companies will jointly develop the software infrastructure needed to support the Chinese business.

Daimler Financial Services Chief Executive Klaus Entenmann, who will be a part of the board of the new venture, stated that with Geely, they have found an excellent partner to expand their mobility services in China.

Intensifying Battle in the Ride-hailing Market

Daimler stated that the JV (joint venture) will provide ride-hailing mobility services in many Chinese cities using premium vehicles including but not limited to Mercedes-Benz vehicles.  

The development of such services, in which both companies already have a presence, forms part of our transformation from a vehicle manufacturer into a global automotive technology group, said Geely Holding President An Conghui.

The deal comes at a time when the prospect of self-driving vehicles hitting the road has amp up competition between tech groups, ride-hailing companies, and traditional firms to introduce fleets of smartphone-hailed taxis, or seal collaboration deals.  

The ride-hailing business represents more than 30 percent of the taxi market worldwide and US bank Goldman Sachs Group Inc. expects it could rise eightfold to $285 billion by 2030, with large growth potential in China, the world’s biggest car market.

Geely already runs Chinese domestic ride-hailing service Caocao Zhuanche which already has more than 17 million registered users, while Daimler owns mobility service provider moovel and e-hailing app mytaxi, which together have 26 million customers.  

Daimler would partner with Geely in China’s ride-hailing market, led by Didi Chuxing Technology Co.

Founded in 2012, Didi has established its dominance in the country when it acquired Chinese operations of US ride-hailing company Uber Technologies Inc. in 2016. It intends to roll out car-sharing and other on-demand transport services.

Shares of Daimler rose 0.02 percent to €50.490 on Wednesday.

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