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Cross-Atlantic Courtship: Daimler and Tesla

It's a partnership that makes a lot of sense: Germany's Daimler, one of the inventors of the automobile more than 100 years ago, is acquiring a "nearly" 10 percent stake in one of the newest and fastest-moving (in both senses of that) companies around: California-based Tesla Motors. The exact price for the stake wasn't disclosed, but Dr. Thomas Weber, a member of Daimler's board, described an unspecified "double-digit million-dollar sum."

The deal grew out of a plan, announced earlier this year, for Tesla to supply battery packs for 1,000 electric Smart cars. Rachel Konrad, Tesla's spokesperson, confirmed that the battery-operated Smarts will come to the U.S., as well as to Europe (Italy and Germany) as was previously announced.

A further relationship between Daimler and Tesla obviously looked advantageous to both sides: Daimler needs Tesla's aggressive drive and battery pack expertise; Tesla needs Daimler's experience rolling out high-volume new models.

According to Michael van der Sande, Tesla's senior vice president of global sales, service and marketing, "Daimler is very well regarded for its engineering integrity, and the investment by them makes us proud. It's like Daimler is saying, "Yes, you are worthy of our investment.'"

Will Daimler have input into Tesla's Model S sedan, which will appear in 2011? "The Model S will have its own platform, and we're not sure what specifically we can or will ask of them on the car. But the arrangement is that they are happy to share their expertise--on manufacturing, engineering, the supply chain, safety, handling, and many other things--in the general sense of the word."

Mercedes is to bring out a battery electric car in 2010, and Tesla's experience would seem to lend itself well to that effort. "We are working together on the Smart car," van der Sande said, "but beyond that we haven't decided what form the collaboration will take. We'd be happy to have a role in the Mercedes battery car--there are several possible projects."

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