Chinese automobile manufacturer BYD announced on Wednesday that it has agreed to inject 350 million yuan ($51 million) in cash into Denza, an equally owned joint venture between BYD and Germany’s Daimler AG that specialises in luxury electric vehicles.
Shenzhen-based BYD, which is backed by U.S. billionaire Warren Buffet, is making the investment through its holding subsidiary BYD Auto Industry Co Ltd. BYD will retain a 50 per cent stake in Denza upon the completion of the transaction, while Daimler Greater China Limited, the Chinese division of Daimler, will continue to hold the other 50 per cent, according to a filing with the Shenzhen stock exchange.
The capital injection represents the latest of a series of financial support provided by BYD and Daimler to the joint venture in the past decade, in an attempt to help it rival competitors including Baidu-backed WM Motor, Xpeng Motors, which received capital from Alibaba, smartphone maker Xiaomi and electronics contract manufacturer Foxconn, as well as indebted NIO.
The two companies are raising their stakes in China’s growing electric vehicle market, where the sales of EVs had outpaced the rest of the world since 2015, driven by the government’s generous cash subsidies and tax rebates to nurture the homegrown industry despite an up to 60 per cent subsidy slash implemented last March, according to China Association of Automobile Manufacturers (CAAM).
Denza, fully known as Shenzhen BYD Daimler New Technology Co Ltd, was created after Daimler and BYD disclosed plans to jointly develop electric cars in China in March 2010 by leveraging BYD’s roots as a battery maker and Daimler’s experience in electric vehicle architecture.
The venture was incorporated in February 2011 with 2.36 billion yuan ($342 million) in initial registered capital.
The firm debuted the Denza X, a seven-seat SUV model that is available in two versions: all-electric and plug-in hybrid, in November 2019. The SUV vehicles are priced between 319,800 yuan ($46,330) and 357,800 yuan ($51,835), shows the company website. Denze had 112,424 charging piles and 14,359 charging stations across 269 cities in China as of early March 2018.
The company booked an operation revenue of 360.51 million yuan ($52 million) and a net loss of 1.01 billion yuan ($146 million) from January to November 2019. It had over 2.58 billion yuan ($374 million) in total assets and more than 2.22 billion yuan ($322 million) in total liabilities as of November 30, 2019, according to unaudited data revealed in the filing.