It already owns Volvo and Lotus, so why wouldn't Geely want to expand even more?
A few days ago we learned that Chinese automaker Geely had purchased 10 percent of Mercedes-Benz parent company Daimler, which equates to some $9 billion worth of stock. This now makes Geely chairman Li Shufu Daimler’s single largest shareholder. Before making the big move on Daimler, however, Bloomberg reports that Geely considered a Fiat Chrysler takeover. It turns out Li quietly approached FCA in the middle of last year as part of a plan to expand outside of his native China.
Although there were some discussions about a potential deal, Li opted not to make a formal offer in the end. Supposedly, the reason was that the two automakers were too far apart on how to evaluate FCA future earnings following the completion of its five-year growth plan through 2018. As of this writing, no one from Geely or FCA has commented on these past talks. It’s really not too surprising Li was interested in FCA, considering Geely already owns Volvo and, more recently, Lotus. While both of those automakers, particularly Lotus, are not anywhere near the size of FCA and its many brands, it’s evidently clear Geely wants to become a global automaker. In addition, it wants to be a future leader in automotive electrification.
“Mr. Li has the foresight to see the electrification evolution disrupting the traditional auto business model," said Steve Man, an analyst at Bloomberg Intelligence. “Automakers will need to align to drive greater synergies in vehicle development and production to keep costs down.” It’s important to know that Geely’s new stake in Daimler is not a takeover, but rather a strategic decision that’ll grant it access to the German automaker’s technology. Daimler has invested huge R&D sums in not only EV technologies, but also in upcoming autonomous vehicles. Li clearly sees where the future of transportation is heading and he’s got the cash to buy his way into the big boys’ club.