SMART AND ELECTRIC: Daimler recently introduced the electric version of Smart Fortwo and will release two electric cars under the Mercedes-Benz brand later this year (CFP)

Daimler has been comparatively conservative in the research and development of new-energy technologies, and has lagged behind Japanese auto giants in this regard. The Daimler-BYD partnership could be a short cut for the German automaker to catch up, while helping its Chinese counterpart make advances as well.

"We will be able to participate in the potential growth of electric mobility in China, currently the largest auto market in the world," said Dr. Zetsche.

The future

But questions about the partnership's future linger.

Will both companies be fully devoted to the venture and the new brand in terms of technology and personnel, or will it short circuit and fail?

Observers are also concerned over the decision-making process as each holds a 50-percent stake in the joint venture.

Competition is another concern as observers wonder whether the joint venture's electric car will compete with Mercedes-Benz's or BYD's existing products, or both.

And many remain skeptical about whether the two companies will support the joint venture with their core technologies.

If the partnership is only a facade, the new brand will not be able to match the two partners in terms of market status and quality.

Another bump in the road for the auto duo could stem from legal issues—foreign companies are allowed to have, at most, two joint-venture vehicle manufacturing facilities in China, and Mercedes-Benz has already reached that quota.

The joint venture between BYD and Daimler, established as a research center, is not entitled for vehicle manufacturing, but eventually both sides will have to decide whether BYD or Mercedes-Benz will produce any electric car the venture develops.

BYD's 2009 Financial Performance and Sales

BYD achieved a net profit of 3.79 billion yuan ($554.9 million) in 2009, up 3.7 times year on year. The company reaped 39.47 billion yuan ($5.78 million) in revenue, of which the auto sector contributed 21 billion yuan ($3.1 million), accounting for 53.18 percent of the total and showing a rise of 142.79 percent from the previous year. The company sold about 450,000 vehicles last year, up 2.7 times year on year.

(Source: www.bydauto.com.cn)

Mercedes-Benz's 2009 Sales in China

Mercedes-Benz sold 68,500 vehicles in the Chinese mainland in 2009, up 77 percent from the previous year, the best ever sales it has attained since its entry into the Chinese market more than two decades ago. The company now has 140 authorized sales and service centers in the Chinese mainland.

(Source: www.mercedes-benz.com.cn)