Daimler to expand Renault-Nissan pact to EVs, exec says

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Daimler to expand Renault-Nissan pact to EVs, exec says

September 14, 2010 10:16 CET

UPDATED: Sept. 14 15:30 CET

STUTTGART (Reuters) -- German luxury carmaker Daimler AG is expanding its cooperation with Renault SA and Nissan Motor Co. to develop electric cars in a race to meet tightening emission reduction rules.

Daimler's research chief, Thomas Weber, told Reuters in an interview its cooperation with Renault and Nissan "will be expanded to include all three partners as far as electric motors, batteries and powertrains are concerned".

The move comes as carmakers and car parts suppliers rush to gain a foothold in the market for zero-emission vehicles as deadlines for lower emission levels near.

Toyota Motor Corp. said on Monday it would offer a plug-in version of its Prius model positioned to be the cheapest green car of its kind by 2012.

France's Renault, its Japanese partner Nissan and Daimler signed a cooperation deal in April initially focusing on small cars, light commercial vehicles and engines.

The cooperation included so far the next-generation Smart ForTwo and Renault Twingo models, as well as the electric versions of the cars, plus the expansion of the Smart and Twingo model lines.

Car emission standards are becoming stricter to fight global warming. Brussels targets an overall level of about 95 grams of CO2 per kilometer by 2020 for new cars sold in Europe.

"We won't be able to meet the target of 95 grams CO2 in 2020 without electric vehicles with batteries and fuel cells," Weber said.

But the new technology is still in its infancy and "it won't be easy to then also earn money with these cars," Weber added.

That's why Daimler has decided to broaden its existing partnership with Renault and Nissan, hoping to cut costs by building scale.

Daimler benefits from economies of scale for small three- and four-cylinder engines, Weber said. "We would have reached quantities of about 500,000 engines at most on our own. Together with Renault we are talking about several million."

Weber added he expects Nissan to purchase a mid-five-digit number of diesel engines from Mercedes as part of the deal.

Daimler shares were up 0.7 percent at 43.98 euros by 11:33 CET, outperforming the DJ Stoxx autos sector index.

Cutting emissions

Daimler will have to bring down its fleet's emissions to below 140g/km of CO2 by 2012 or else risk fines. Emissions of its fleet -- ranging from its Smart brand to the Mercedes S-class and E-class sedans -- equated to 160g/km of CO2 on average last year.

To help get there Daimler agreed in March with China's BYD Co. to develop electric cars for China.

Daimler said it aims to sell 150,000 to 200,000 zero-emission passenger cars in Europe by 2020. The carmaker sold just over a million cars overall last year.

Sales of premium carmakers like Daimler are driven by soaring demand from China as living standards rise in the world's most populous nation.

As a result, Daimler plans to produce more cars in China and to broaden its cooperation with German peer BMW to include purchasing car parts in China, Weber said.

BMW procurement chief Herbert Diess told Reuters about such plans in an interview this month and said he expects to save about 100 million euros ($128.7 million) per year from 2012/2013 thanks to the cooperation with Daimler.

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