What does Geely Daimler's joint development of the next generation hybrid system reveal?

SMM News: Geely and Daimler teamed up to "make trouble" again.

On November 21, Geely announced that Daimler AG (parent company of Mercedes-Benz) and Geely Holdings Group (parent company of Volvo) plan to cooperate on an efficient powertrain for next-generation hybrid vehicle technology.

Specifically, Geely and Daimler will use their global R & D network to jointly develop the next generation of gasoline engines for hybrid technology. The engine, which will be produced at partner engine plants in Europe and China, is likely to be adopted by Mercedes-Benz AG and its existing partners in China and used in the brand portfolio of Geely Holdings, including Volvo.

Geely and Daimler plan to jointly develop the next generation gasoline engine for hybrid technology. Photo: Geely Holdings

Cooperation between Geely and Daimler continues to deepen

Geely's partnership with Daimler is reasonable and not unexpected, which stems from a long history between the two sides.

In February 2018, Geely Group Co., Ltd. (owned by Li Shufu and managed by Geely Holdings Group) announced that it had acquired 9.69% of the voting shares of Daimler through its overseas enterprises. Although in the process of the acquisition, the German Federal Financial Regulatory Authority said it would consider fining the parties concerned because it thought the acquisition was suspected of violating the rules, it finally concluded its investigation into the acquisition at the end of 2018. And decided not to impose any fines on Geely. This means that Geely has really become Daimler's largest shareholder.

As a long-term strategic investor in Daimler, Geely has been looking for cooperation opportunities with a clear purpose, that is, to occupy the technological commanding heights through coordination and sharing. It is reported that before this cooperation for hybrid systems, Geely and Daimler had already worked on three projects.

First of all, join hands in the layout of high-end shared travel. In October 2018, Daimler Travel Services Co., Ltd. and Geely Technology Group Co., Ltd., managed by Geely Holdings Group, announced that they would form a joint venture in China to provide high-end chauffeured car services. The joint venture is headquartered in Hangzhou and is owned by both sides at 50:50. In December 2019, Yaocheng, a brand focusing on high-end chauffeured car service, was officially launched in Hangzhou. It is reported that Yaoxing has carried out operations in Hangzhou, Guangzhou, Chengdu, Xi'an and other cities.

Second, the joint operation of high-end electric smart car brand smart. In March 2019, Geely Holdings and Daimler announced that they would set up a joint venture to jointly operate and promote the transformation of the smart brand around the world, with a view to building the brand into the world's leading high-end electric smart car brand. The joint venture is headquartered in China and is 50% owned by both sides. In January this year, with the approval of the relevant regulatory authorities, the smart brand global joint venture "Zhi Motor Automobile Co., Ltd." was formally established. The joint venture company is headquartered in Ningbo Hangzhou Bay New area and set up marketing centers in China and Germany respectively. In July this year, smart Europe Co., Ltd. was established as a wholly owned subsidiary of Smart Motor Co., Ltd., which will be responsible for the future supply, sales and after-sales service of smart in the European market.

In addition, the common layout of low-altitude travel areas. In September 2019, Volocopter, a German city air travel company, announced that it had completed the first round of round C with a total financing of 50 million euros, led by Geely Holdings Group, and Daimler AG also participated in the investment, each holding 10 per cent.

From the above, we can see that the cooperation between Geely and Daimler is expanding both in breadth and depth, and it is reasonable to take this as a background to look at the cooperation between the two sides in the field of mixing.

Joint development of hybrid system is the need of transformation

As a direction of automobile development in the future, new energy vehicles have been widely recognized by the industry. Behind the phenomenon that the market value of the new car-building forces represented by Tesla, BYD, Ulai and Xiaopeng once surpassed that of Toyota, GM, Ford, BMW and other established automobile giants, we can also see the affirmation of this trend in the capital market. Most importantly, driven by policy, technology and other factors, the sales of new energy vehicles are continuing to grow.

In this context, why did Geely and Daimler choose a coded hybrid system?

In fact, the layout of the hybrid system of automobile enterprises is not contradictory to the route of developing new energy vehicles, and it can even be said to pave the way for the latter. Because at present, in the face of the impact of automobile electrification, although some enterprises are making every effort to develop pure electricity, for most traditional automobile enterprises, they are more likely to achieve the transformation step by step through mixing.

It is not difficult to understand that despite the rapid development of the pure electricity market, the market volume, product maturity and infrastructure construction are far inferior to the traditional fuel vehicle market. At present, traditional fuel vehicles still occupy about 90% of the market. In addition, if the complete transformation of pure electricity, traditional car companies will face a large area of replacement of production lines, as well as the reconstruction of all kinds of infrastructure, which will bring great challenges to car companies.

Because of this, such as Toyota, Honda, SAIC, Guangzhou Automobile and many other traditional car companies in the development of pure trams, but also the layout of hybrid technology. Geely and Daimler follow the same strategy, and according to them, both sides see efficient powertrain technology as one of the core of the current transformation of the auto industry, which will accelerate the transition to zero-emission travel.

From Daimler's point of view, the cooperation project with Geely Holdings and its brands is an integral part of Mercedes-Benz's overall power system strategy in the future. Daimler officials say its vision remains carbon neutral. Daimler is committed to achieving carbon neutrality in the new passenger car lineup by 2039. The gradual electrification of various power systems is an integral part of our drive system strategy. To this end, we are systematically promoting product transformation and hope that hybrid and pure electric models will account for more than half of global passenger car sales by 2030. "

From Geely's point of view, Geely's new energy strategy is pure electricity and hybrid parallel. It is reported that it has formed two parallel energy saving and emission reduction routes of "efficient fuel power" and "diversified new energy" in related fields such as energy conservation and environmental protection, electrification and new energy.

While actively laying out the pure electric field, Geely believes that hybrid technology is the first choice to meet national emission requirements and cost-effectiveness in the short term, and Geely's technical reserves and manufacturing capacity in this area have been basically completed. It has been revealed that Geely's second-generation hybrid products will be introduced to the market next year, further improving energy-saving efficiency.

It is also understood that in the core electronic control software and hardware system, Geely has 48V, high-voltage hybrid, pure electric, body control, high-voltage motor control and fuel cell system control and software development capabilities, mastered the new energy VCU, IPU, BMS and other core components technology, and have achieved mass production applications.

Of course, for Geely and Daimler, the joint development of next-generation hybrid systems also helps to achieve cost advantages through economies of scale. Geely said that this cooperation is not only the embodiment of increasing investment and application in the research and development of clean and efficient powertrain and hybrid power system, but also out of the need of scale effect. Daimler pointed out that at Daimler, the newly established Mercedes-Benz powertrain division will lead the cooperation project to improve the cost advantage.

It is the right time to seize the hybrid market share.

On October 27th this year, at the 2020 Annual meeting and Exhibition of the Chinese Society of Automotive Engineering, Academician Li Jun, academician of the Chinese Academy of Engineering, chairman of the Chinese Society of Automotive Engineering and professor of Tsinghua University, announced the official release of the 2.0 version of the Roadmap for Energy Saving and New Energy vehicle Technology. Among them, he proposed that by 2035, the annual sales of energy-efficient vehicles and new energy vehicles will account for half of each other, and all traditional energy-powered passenger vehicles will be converted to hybrid power, so as to realize the overall electric transformation of the automobile industry.

This means that the development direction of promoting the overall transformation of traditional fuel vehicles to hybrid vehicles is clear, which is bound to lead to more layout of car companies in the hybrid field.

Ye Shengji, chief engineer and deputy secretary-general of the China Association of Automobile Manufacturers, said in a recent interview that at present, various automobile companies have significantly strengthened their investment in the research and development and industrialization of hybrid electric vehicles, and the pace of industrialization has been accelerated. FAW, Dongfeng, SAIC, Changan, Chery, BYD and others have invested a lot of money and resources. Hybrid electric vehicles have been developed, and some of them have been listed in small quantities.

However, it is worth noting that many car companies in China lack sufficient technical reserves in hybrid electric vehicles, and there is no doubt that they will face greater challenges if they want to make a comprehensive transformation in less than 15 years. This is true even for Geely, which started laying out hybrid technology in its early years. From this point of view, Geely teamed up with Daimler to develop a hybrid system, which is easier to understand. after all, working with Daimler at this time, it will have the opportunity to take advantage of its technology to gain ground in the hybrid market.

Of course, while the local car companies strengthen the layout of the hybrid field, there are bound to be many overseas car companies hoping to take the opportunity to expand their sales in China. At present, Toyota, Nissan and other car companies seem to be making relevant preparations. It is reported that Nissan plans to launch five to six hybrid models in China over the next three years, including the best-selling Xuanyi (sylphy) sedan.

From Daimler's point of view, this seems to be one of the intentions behind its partnership with Geely. As Tang Shikai (Hubertus Troska), a board member of Daimler AG and in charge of Greater China, said, over the past few years, Daimler has witnessed the strong development of China's automotive industry and firmly believes that China will continue to bring great potential in terms of innovation, efficiency and economies of scale. "through this cooperation with Geely Holdings and its brands, we will not only deepen our presence in the world's largest auto market. At the same time, it will also strengthen our dominant position in the global automotive industry chain in the future. "

From this point of view, at least in the next 15 years, the hybrid market will be lively.