How Mercedes-Benz shares want to fix their 90 billion mistakes |  information

How Mercedes-Benz shares want to fix their 90 billion mistakes | information


One can Mercedes Benz (WKN: 710000) can hardly be accused of not recognizing the impending changes to electric mobility early enough. At the beginning of 2009, the car manufacturer, then called Daimler, invested 50 million euros in Tesla (WKN: A1CX3T) and in return took about 10% of the electric car manufacturer, which would probably have gone bankrupt without the investment from Stuttgart.

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Tesla was also allowed to provide powertrains for the electric Smart, but there was no deeper cooperation. Also because the Swabians sold their shares again in the following five years. Today, 10% of Tesla’s stock would be worth around 90 billion euros and thus significantly more than Mercedes-Benz as a whole (as of September 12, 2022).

Now Mercedes-Benz seems to want to do better with a new partnership in the car business: the Swabians have a letter of intent with them. Rivian (NASDAQ:TSLK) (NYSE:EV) — an electric car startup that resembles Tesla in several ways.

Mercedes-Benz and Rivian: This partnership makes sense

The two companies intend to establish a joint venture and invest in a joint factory.

The first vans could roll off the assembly line here in just a few years. The cars will continue to be different – only the platforms on which commercial vehicles from Mercedes-Benz and Rivian are built are different. However, the joint use of production methods should lead to compromises, which can reduce costs. Sharing investment costs can also pay off for both companies.

Both Mercedes-Benz and Rivian have high expectations when it comes to electric commercial vehicles: the Swabians already offer a number of models and do not want to introduce combustion engines from the middle of the decade, only electric vehicles. The automaker is also developing a new vehicle platform called VAN.EA for this purpose. Rivian already owns its vehicle platform with a bulk order from its partner Amazon (WKN: 906866). By 2030, Tesla’s rival aims to produce one million cars a year.

Electromobility: cooperation as a solution to the knot?

However, for various reasons, things are not going well for both companies. At its core, Mercedes-Benz is still a manufacturer of cars with internal combustion engines – it will take years to align internal know-how and corporate culture with an electric, software-driven future. Automakers are also threatening to face a financial crisis in the coming quarters.

Although Rivian has more of a start-up culture, it currently has serious problems increasing production and is in a very bad situation. In addition, no European territory is planned for the company so far.

So, a joint factory could make sense for both companies and help eliminate respective weaknesses – although I also wonder how much synergy Mercedes-Benz and Rivian can create when the pickup trucks are based on different platforms.

Mercedes-Benz: Don’t make Tesla’s mistakes again!

In the absence of Tesla’s deep cooperation and the early sale of shares, the Stuttgart company lost a financial and technological opportunity of a billion euros. The partnership with Rivian is an opportunity to pay for Tesla’s mistake.

Item How Mercedes-Benz stock would like to end its 90 billion mistake appeared first Motley Fool Germany.

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Christoph Gössel owns shares in Tesla. John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. The Motley Fool owns stocks and recommends Amazon and Tesla.

Motley Fool Germany 2022