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Daimler invests in Tesla

Posted by Hootan Mahallati | May 19, 2009 | In daimler founder's thoughts green mercedes-benz news tesla

Daimler, the parent company of Mercedes-Benz, has made an investment in California-based Tesla Motors in return for a 10% stake. This is a smart move for Daimler and a strategic home-run for Tesla. The electrification of the vehicle is still in its infancy, what with range, battery life and maintenance infrastructure a long way from readiness for mass-adoption.

Through its investment, Daimler not only buys itself a stake in the immense buzz and public goodwill toward the first full-electric vehicle of the US market of recent times, but it also taps into the technology pioneered by Tesla, allowing it to more easily adapt it to its lineup of products. Of course, this investment follows on the heels of a previous supply agreement in which Tesla supplies batteries and charging technology to Daimler for use in the upcoming electric Smart.

As for Tesla, a formal relationship with Daimler allows it to scale its technology faster and reduce the cost of new innovations through improved economies of scale. Furthermore, it would only make sense for both parties to share platform engineering costs and know-how, especially for the Tesla S sedan. Tesla relies heavily on Lotus Engineering for chassis engineering and integration. Lotus is one of the most reputable engineering consultancies in the industry and therefore, Daimler will only be too happy to potentially adopt what Lotus has provided to Tesla.

All in all, this deal bodes well for the fate of the electric vehicle market, and I would not at be at all surprised to see Daimler increase the size of its investment in Tesla in the next few years.

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