Daimler and Chinese joint venture partner BAIC Motor Corporation have strengthened their partnership with an agreement to invest 5 billion yuan ($735 million) in electric vehicle production in China.

Neither of the two companies have specified exactly where all of that money will be invested but Daimler did confirm that over 100 million euros worth will be funnelled to the construction of a new Chinese battery factory.

In a statement, member of the Board of Management of Daimler AG, responsible for Greater China, Hubertus Troska, said “We are investing in the world’s largest market for Battery Electric Vehicles. By 2025, the Chinese market will have a substantial share in sales of Mercedes-Benz electric vehicles. Therefore, local production will be key to the success of our EV portfolio, and crucial to flexibly serving local demand for electric vehicles.”

Adding to this, chairman of the BAIC Group Xu Heyi said “By confirming our joint commitment to the development of electric drive in China, and undertaking preparations to produce BEVs at BBAC, we are giving full play to the respective strengths of both sides. Together, we are laying the groundwork for our joint venture facility BBAC to become a future BEV production hub in China.”

The Chinese facility will be just the latest in Daimler’s 1 billion euro investment to establish itself as an industry leader in battery production.

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