Denza's stakes change, with BYD and Daimler holding 90% and 10% respectively

On December 24, Daimler announced that Daimler Greater China Investment Co., Ltd. (hereinafter referred to as "Daimler") and its Chinese partner BYD Automobile Industry Co., Ltd. (hereinafter referred to as "BYD") have signed an equity transfer agreement on adjusting the structure of its joint venture Shenzhen Denza New Energy Automobile Co., Ltd. (hereinafter referred to as "Denza"),with the intention of completing the equity transfer between the two parties in Denza. Upon completion of the transfer, Daimler and BYD will hold 10% and 90% of Denza's shares, respectively. The matter is subject to the approval of the relevant regulatory authorities and is scheduled to be completed by mid-2022.

Daimler said that BYD and Daimler are committed to accelerating the development of the Denza brand in the fast-growing Chinese new energy vehicle market. The Denza brand will launch new models in the Chinese market in 2022 to further expand the market. The Denza brand operations team will ensure that it continues to provide relevant services to existing customers.

In 2010, Daimler and BYD signed an agreement to establish a 50:50 R&D technology joint venture "Shenzhen BYD Daimler New Technology Co., Ltd." (renamed "Denza" in 2016) to develop and produce new energy vehicles. The joint venture launched a brand new model under the brand name "Denza", which is the first Sino-foreign joint venture in China to focus on new energy vehicles.

Since the launch of the Denza brand, its market performance has not yet made a major breakthrough. In 2012, the "DENZA Denza" brand was officially released, and the first model, the Denza 300, was officially launched in 2014, subsidizing 369,000-399,000 yuan before the sale. In 2017, the Denza 400 model was launched, and in 2018, the Denza 500 was officially launched. Although Denza released three cars, the three cars did not change much before and after. At that time, depressing brand awareness was not high, it did not form an advantage in terms of price. According to the official website of Denza, there are currently two models of Denza X plug-in hybrid and pure electric on sale. Due to poor performance, Denza has also been surviving on the "blood transfusion" of both shareholders, and BYD and Daimler have increased their capital many times.

Denza's products are based on Mercedes-Benz B-class chassis technology and BYD's Sankyo technology, which is not bad in terms of product quality and performance and has a high cruising range. As for the reasons for Denza's poor performance, BYD has given an explanation that Denza New Energy is China's first joint venture brand focusing on new energy vehicles. However, as a new brand, deforestation still needs a certain period of time to cultivate its brand influence and market acceptance, and its sales volume has been at a relatively low level since its listing. The low sales volume made Denza New Energy fail to achieve economies of scale, and the initial research and development investment was large, resulting in a large amount of operating losses.

In order to promote the development of Denza, BYD and Daimler increased their capital again. BYD announced this evening that BYD and Daimler intend to increase deforestation by 1 billion yuan in currency according to the proportion of shareholding. After the completion of the capital increase of both shareholders, BYD and Daimler will continue to hold 50% of deforestation's shares respectively. The capital increase is mainly used for the daily operating funds of Denza New Energy, which is conducive to promoting the sustainable development of Denza's new energy vehicle business and providing financial support for Denza New Energy to create better and more competitive products.