Daimler’s Tesla stake sale signals growing rivalry with each other

Article by Andrew Christian, on October 24, 2014

While Daimler said that its decision to sell its 4-percent stake in Tesla Motors would not affect its working relations with the US EV-maker, analysts speculate that such a move means growing rivalry between the former partners.

Daimler acquired 9.1-percent stake in Tesla for around $50 million in 2009 as a way of securing cutting-edge battery technology. Tesla now provides such technology for the electrified variants of the Mercedes B class and Smart ForTwo.

Capital hikes at Tesla, however, have diluted Daimler’s holdings to just about 4 percent. When Daimler first invested in Tesla, the US EV maker was still niche premium brand. Daimler’s stake in Tesla means the German group has preferential access to the latter’s technology.

Tesla, however, announced in June that it would open most of its patents to other carmaker to advance investments in electric vehicle technology – which may mean that Daimler would not benefit much if it remains as an exclusive partnership with the US carmaker.

Daimler, however, said in a statement its cooperation deal remains intact, saying that a stake was not necessary for it to continue working with Tesla.

Richard Hilgert, an analyst with Morningstar, remarked that Daimler does not have to be a Tesla stakeholder to acquire any technology from the US firm since its chief executive Elon Musk has made the technology an open source.

For analysts, Daimler’s decision to sell its Tesla stake could be an indication that the partners now see each other as rivals in the EV market. "There is a difference between working together and partnership,” analysts at ISI Research said in a note.

Topics: daimler, tesla

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