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Daimler Mulls Options for Li-Tec Battery Joint Venture

Daimler AG (DAI), the third-biggest luxury-carmaker, is reviewing options for its battery-cell joint venture Li-Tec with Evonik Industries AG (EVK), including bringing in a new partner.

Daimler intends to give the Li-Tec venture “a broader footing” in the “challenging” battery-cell market, spokeswoman Silke Walters said today by phone. “No decision has been made.” German chemical maker Evonik’s spokeswoman Barbara Mueller said the review may lead to “bringing a new strategic partner on board.”

The two companies formed the joint venture at the end of 2008 to provide future Daimler electric vehicles with batteries and give the Stuttgart-based manufacturer an edge in electric vehicles over Bayerische Motoren Werke AG. Daimler last year introduced an electric version of its Smart two-seater and plans to roll out the B-Class Electric Drive next year.

The partners were mulling a sale of the joint venture and were looking for a price of about 1 billion euros ($1.3 billion), the German online edition of the Wall Street Journal reported earlier today, citing unidentified sources.

A sale of Li-Tec, in which Daimler initially invested a low three-million-digit euro sum, would mean a departure from the company’s efforts to control all technologies along the value chain of electric vehicles, including cell technology and the electric engine. The step would also underscore that demand for battery electric vehicles has unfolded slower than expected.

Li-Tec posted a loss of 26 million euros in 2011, according to Daimler’s 2012 annual report.

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Evonik, which listed shares in Frankfurt this year, said May 8 that first-quarter profit fell 10 percent as the company cut prices for some of its products and raw-material costs rose.

Evonik Chief Executive Officer Klaus Engel has boosted the company’s profitability more than 5 percentage points in five years, focusing the company on higher-margin specialty chemicals and new technologies such as fiber membranes to make biogas.

Daimler has risen 18 percent in Frankfurt trading since the start of this year while Evonik has dropped 9.1 percent since its April IPO.

To contact the reporters on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net; Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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