News agency Bloomberg reported on May 4 that Tianqi Lithium is considering spending as much as USD 200 million to acquire a stake in Smart Automobile, a joint venture of Mercedes-Benz and Geely. According to unnamed sources, Tianqi Lithium is evaluating the feasibility of obtaining a minority stake in Smart Automobile for an amount of USD 100-200 million. Also, negotiations among the relevant parties are reportedly to have begun. This investment could be the latest round of private financing for the automotive brand.
Smart Automobile was established in January 2020 with a registered capital of CNY 5.4 billion. Geely and Mercedes-Benz each put up half of the registered capital. The latter obtained the corresponding shares mainly through investments in the brand. Smart Automobile’s mission is to grow this “green” automotive brand and promote it worldwide.
Smart Automobile is now accelerating its efforts to transition its offerings from vehicles that run on fossil fuels to vehicles that run only batteries. The Smart 1, which is an electric subcompact, was released in China in 2022. It is powered by batteries provided by CALB and REPT.
According to the available data, the number of the Smart 1 sold in China reached 4,390 for April. A cumulative total of 26,299 vehicles were delivered for this model. Furthermore, the upcoming successor model Smart 3 was unveiled at Auto Shanghai 2023 that was also held in April. The Smart 3 is scheduled for delivery in China this June.
Tianqi Lithium is among the major Chinese suppliers for lithium products and has achieved total self-sufficiency for lithium concentrate. Currently, the company has the rights to mine at four major lithium reserves: the Greenbushes mine in Australia, the Yajiang Cuo’la mine in Sichuan, the Atacama brine lake in Chile, and the Zabuye brine lake in Tibet.
If Tianqi Lithium does invest in Smart Automobile, it would cross into the most downstream section of the Li-ion battery supply chain and form partnerships with carmakers. Together, they would share both profits and risks. At the same time, a deal like this would allow Tianqi Lithium to gain a larger share of the demand from the market for new energy vehicles. This, in turn, would further strengthen its position in the battery supply chain.
It is worth noting that Tianqi’s rival Ganfeng Lithium is also actively expanding into the downstream of the supply chain. Last August, Ganfeng Lithium announced that it will become strategic investor in GAC-Aion. Soon afterwards, it also participated in the Series-A funding round for Voyah, a startup focusing on electric vehicles.
This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.