Live Blog: Daimler announces new strategic partnership with Tesla for EVs, takes 10% stake
by Sam Abuelsamid on May 19th 2009 at 6:50AM 
In just a few minutes, Daimler will be starting a press conference with Dr. Thomas Weber, the head of R&D for Mercedes-Benz. Dr. Weber will be making an announcement about a new strategic partnership for electric vehicles. Most of the speculation at this point involves a possible investment in Tesla Motors. The startup is already supplying batteries and charging systems for the second generation Smart ED.
655am: We're just waiting for Dr. Weber to come to the podium
658am: It is Tesla. They just flashed a slide up on the screen with the daimler and Tesla logos.
705am: Still waiting for the start of the press conference, wondering if Musk will join Weber at the podium
706am Now beginning.
continue after the jump.
708am: the press conference is coming from the Mercedes museusm and Musk is sitting next to Weber
709am: Elon is speaking now, thanks Daimler for investing in Tesla, no details yet
710am: Weber takes the podium Talks about combining best of old and new school
712am: optimizing current ICE engines, adding hybrid and finally going ZEV. Convinced electrification is the future. Mercedes has been testing EV since early 70s with battery powered vans.
714am: Praises Tesla for bringing an "extraordinary" electric roadster to market quickly. Weber believes this spirit of lean management will enhance both companies. MB chose Tesla battery for Smart ED because they could the project quickly.
715am: Volume electric Smart coming in 2012 with LiTec batteries. Two companies will collaborate on developing batteries and Mercedes will supply hardware to Tesla for its vehicles.
716am: Speed and time to market is critical and partnerships make this happen.
Daimler will also invest in other partners for motors and other components, Daimler is taking modular approach to electrification.
Starting off the Q&A, Daimler reveals it paid a double digit million dollar sum for a 10 percent stake in Tesla with future options for more.
Daimler and Tesla will collaborate on future models including possibly the Model S which may get some Mercedes parts.
Weber and Musk both emphasize that weight reduction is a major emphasis for the future. Weber says its time to reinvent the automobile.
The next step for Mercedes is an electrified Smart to widen that lineup. Musk says it definitely possible to have a Smart that goes "like a bat out of hell." Deal includes both companies sharing knowledge on future oriented vehicles.
Priority with Tesla is to speed up processes to bring EVs to market, Weber believes small cars like Smart are the place to start while Tesla has shown it can be done with sporty cars
Musk says Daimler provides engineering expertise for mass production while Tesla provides expertise in batteries and electric drive
Weber says that the electric drive systems will be applied to all types of vehicles including urban commercial vehicles.
Commitment is to start with Tesla's current lithium cobalt oxide batteries. Moving ahead they will look at "common interest" and LiTec (Daimler's battey JV with Evonik). This will help reduce costs to bring batteries to mass market. Priority is safety, high energy content and affordabiity.
Musk explaining that Tesla works on the battery packs and is not commited to a specific cell type. That is the electromechanical problem of integrating cells, electronics etc. Tesla is agnostic to cell types and is open to using LiTec cells.
Weber believes they have the best cell on the market with the LiTec cells.
Weber responds to question about fuel cells, reiterates that MB's electric concept is best on modularity allowing them to use common motors, electronics, batteries and other components regardless of whether they are BEV or FCEV.
Volume production with 5 digit plus volumes starting in 2012.
Musk responding to question about the number of cells in the battery pack, says the current plan is to use the laptop cells for the model S with up to 8,000 cells. However, they may switch to a different cell design that would only use 1/4 of the cells or less
Weber says, Daimler will get one board seat at Tesla and Mercedes head of E-Drive systems will work with Tesla starting right away.
Musk says the share price paid by Daimler is less than what they could have gotten from a financial investor, but Daimler's engineering expertise had more value.
That's all for now.
709am: Elon is speaking now, thanks Daimler for investing in Tesla, no details yet
710am: Weber takes the podium Talks about combining best of old and new school
712am: optimizing current ICE engines, adding hybrid and finally going ZEV. Convinced electrification is the future. Mercedes has been testing EV since early 70s with battery powered vans.
714am: Praises Tesla for bringing an "extraordinary" electric roadster to market quickly. Weber believes this spirit of lean management will enhance both companies. MB chose Tesla battery for Smart ED because they could the project quickly.
715am: Volume electric Smart coming in 2012 with LiTec batteries. Two companies will collaborate on developing batteries and Mercedes will supply hardware to Tesla for its vehicles.
716am: Speed and time to market is critical and partnerships make this happen.
Daimler will also invest in other partners for motors and other components, Daimler is taking modular approach to electrification.
Starting off the Q&A, Daimler reveals it paid a double digit million dollar sum for a 10 percent stake in Tesla with future options for more.
Daimler and Tesla will collaborate on future models including possibly the Model S which may get some Mercedes parts.
Weber and Musk both emphasize that weight reduction is a major emphasis for the future. Weber says its time to reinvent the automobile.
The next step for Mercedes is an electrified Smart to widen that lineup. Musk says it definitely possible to have a Smart that goes "like a bat out of hell." Deal includes both companies sharing knowledge on future oriented vehicles.
Priority with Tesla is to speed up processes to bring EVs to market, Weber believes small cars like Smart are the place to start while Tesla has shown it can be done with sporty cars
Musk says Daimler provides engineering expertise for mass production while Tesla provides expertise in batteries and electric drive
Weber says that the electric drive systems will be applied to all types of vehicles including urban commercial vehicles.
Commitment is to start with Tesla's current lithium cobalt oxide batteries. Moving ahead they will look at "common interest" and LiTec (Daimler's battey JV with Evonik). This will help reduce costs to bring batteries to mass market. Priority is safety, high energy content and affordabiity.
Musk explaining that Tesla works on the battery packs and is not commited to a specific cell type. That is the electromechanical problem of integrating cells, electronics etc. Tesla is agnostic to cell types and is open to using LiTec cells.
Weber believes they have the best cell on the market with the LiTec cells.
Weber responds to question about fuel cells, reiterates that MB's electric concept is best on modularity allowing them to use common motors, electronics, batteries and other components regardless of whether they are BEV or FCEV.
Volume production with 5 digit plus volumes starting in 2012.
Musk responding to question about the number of cells in the battery pack, says the current plan is to use the laptop cells for the model S with up to 8,000 cells. However, they may switch to a different cell design that would only use 1/4 of the cells or less
Weber says, Daimler will get one board seat at Tesla and Mercedes head of E-Drive systems will work with Tesla starting right away.
Musk says the share price paid by Daimler is less than what they could have gotten from a financial investor, but Daimler's engineering expertise had more value.
That's all for now.
Reader Comments (Page 1 of 2)
pulp1 7:13AM (5/19/2009)
That's absolutely astonishing for a car company born in 2003 ! It's a good match with Benz !
Reply
Spence 7:13AM (5/19/2009)
This is awesome. Let's hope this means the Model S will be on the way, followed by a C-Class level electric family sedan. And electric smarts, please god, electric smarts for the people!
Reply
DF 10:30AM (5/19/2009)
Another sad day for the US business community and another small nail in the coffin of the US economy. I believe that the American people it is basically good people and that is why these “liebenborn” look alike take advantage and abuse you and your country. These “boers” and “bosches” are sucking you dry. As someone said in the other day, you do not need to look for the anti-American crowd anywhere else but inside the US.
Duke 2:49PM (5/19/2009)
DF - What? Did that rant really fit this news?
Markus Roder 7:31AM (5/21/2009)
DF,
You are an idiot and a racist. Your arguments against the Germans were once used in Germany - against the "Rubensteins" and "Goldbergs"... and we all know where that led.
Racists and nationalists are assholes - everywhere.
Spence 7:18AM (5/19/2009)
Yes! Electric smarts! Now if only my twenty year old Benz can last another three years...
Reply
BAUMM III 7:53AM (5/19/2009)
Wait a second, back in March 2009, Arab investors buy 9.1% of Daimler and Kuwait have 6.9% of Daimler.
See http://www.daimler.com/dccom/0-5-7196-1-70868-1-0-0-0-0-0-7751-0-0-0-0-0-0-0-0.html
When that happen, I thought "true that Mercedes is producing successful luxury car with big engines (up to 517 HP!), typically a brand that petrol producers want to support"
Now Daimler is investing in Tesla, this a good news?
The Model S threaten Mercedes?
Tesla started to be a little annoying?
Ah "to market quickly" was the words in this conference!
Paranoia?
Reply
Spence 7:56AM (5/19/2009)
I also heard that Kevin Bacon drives a Mercedes. Hum....
Yes. That's some paranoia.
Tohe 12:37PM (5/19/2009)
The Abu Dhabi's investment was intended to fund Daimler's EV research and development, so basically the Arabs are funding Tesla, great!
http://www.theautochannel.com/news/2009/03/22/454222.html
Nicholas 12:59PM (5/19/2009)
@Tohe
What Daimler is doing is called money laundry. Tesla is acting like a street performer, whom you give your money to later see him high on drugs around the corner, so disaponting.
Zeph 8:14AM (5/19/2009)
This could either be very good (mercedes going full electric in the midterm, tesla surviving) or very bad (tesla gets eaten by monopolists and shelved as the mainstream offers hybrids which are just as expensive, require more maintenance at more cost and are more unreliable with a higher TCO).
If they are using common sense they will foster tesla and electrics and go after the long term market, if they are just mindlessly following the money we are up shit creek.
Fingers crossed on this one.
Reply
bvz 1:40PM (5/19/2009)
RE: "tesla gets eaten by monopolists and shelved as the mainstream offers hybrids which are just as expensive"
I don't think this will happen because Daimler only purchased 10% interest, not enough to derail Tesla from that perspective. On top of that, there are a number of other companies out there working on fully electric vehicles (as well as nearly electric vehicles like the volt) so simply stopping one small manufacturer wouldn't appreciably change the landscape. Electric vehicles are coming no matter what happens with this deal. I think the intent here is to get as much technical experience as possible on the part of Daimler, and to get as much manufacturing support as possible on the part of Tesla.
John Pelletier 8:23AM (5/19/2009)
this was not a majority stake as far as i am concerned, and come on Musk wouldn't let that happen in a million years. i think this will be very very good and Daimler knows that by working with tesla it can get its electrics on the road faster and capture the initial electric push. tesla needs help in mass production and it would not be far to say that possible use of Daimlers distribution network. there will be competition between the two eventually, maybe but that is a long way off. great news, very exciting!!
Reply
paulwesterberg 11:00AM (5/19/2009)
Usually agreements like this include stipulations as to how they are going to divide up market segments so they minimize competing overlap. Daimler might have agreed to only release electric vehicles outside the US or to concentrate on launching a lineup of smaller EVs to begin with.
The market for a well made affordable EVs is larger than both of these companies can handle so competition wont be much of a factor for a few years.
Throwback 8:30AM (5/19/2009)
So this is the end game for Musk, well played. Daimler will buy the rest of Tesla in a few years and Elon can move on to his electric plane. If the Model S uses the old E series platform, I doubt they will be able to meet their $57,500 price point.
Reply
jake 1:36PM (5/19/2009)
The Dodge Charger & Chrysler 300 based on the same E-class platform starts at roughly $25k, so it's not that expensive a platform (though I realize volume plays a big part). How close to the $57k they get will depend on how low the cell prices go by the time they make the car. Right now they have been quoted a Roadster battery pack replacement price of $30-36k (unknown how much, if any, margins they make on this price), if you factor in the smaller size of the Model S pack, that's a $24-29k replacement price. Assuming the ~5% annual reduction trend they project is true, that's $21-26k in 2011.
So they have $6-11k to use for luxury, accounting for lower volumes, and differences in powertrain costs. Not a very safe margin depending on how much margin they make on the replacement packs. I anticipate a price increase like they did on the Roadster and like Fisker did on the Karma.
Throwback 1:59PM (5/19/2009)
Jake, you also have to factor in a new plant to build the car. If Musk is serious about building in Cali, tack on another 10K. Also, the 300 platform was a midified E series platform from 2 model generations ago, so the platform is going on 10 years old and it is heavy. I would think weight (lack of) will be critical to the success of this car.
jharlan 9:11AM (5/19/2009)
This reminds me of the Microsoft-IBM partnership of the 80s. Basically Daimler is capitulating that Tesla has jumped ahead of everyone with EVs. Tesla will get critically needed funding plus the prestige of a partnership with Daimler, and Daimler will get some of Tesla's proprietary technology. What a coup for Elon!
Reply
Matt 9:13AM (5/19/2009)
Here's an idea: Retool the Tuscaloosa, AL plant that makes that used to make the M-Class to instead build these electric Smarts! Those SUV's aren't exactly selling like hot cakes, and the plant is at something like 1/3 capacity. Tesla is American, that plant is an American stronghold for Daimler; seems like a perfect location...
Reply
Matt 9:15AM (5/19/2009)
crap, I thought my strike-through command would work, but instead it looks like a typo... anybody know how to do that on this blog?