Thread by @jpr007

DAIMLER AND FARASIS

€400 million investment on a valuation of €13.3 billion

But "the first battery cell samples from Mercedes supplier Farasis appear to be unusable. Even an end to the cooperation is apparently possible"

DATELINE : 24 February 2021
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The introduction of electric cars enjoys top priority at Mercedes - Daimler has made this clear on the occasion of a demand due to the current semiconductor shortage

The battery is one of the most important components of an electric car - many manufacturers want to build it themselves

But when it comes to manufacturing the cells contained in the batteries, most carmakers prefer to let suppliers have a go

Daimler is working with the Chinese-American supplier Farasis on this - and it has now delivered the first sample cells, which, according to company sources, are "catastrophic"

The best-known Chinese battery manufacturer at present is Contemporary Amperex Technology CATL from Ningde, which, among other things, is currently building a large plant for vehicle batteries in Erfurt, the capital of the German state of Thuringia

Likewise, Svolt from Changzhou has recently gained notoriety - the company emerged from the Chinese carmaker Great Wall and is building a battery production plant in Saarland

It is known from Farasis that the company, which was founded in 2002, is cooperating with Daimler and wants to build a battery factory in Bitterfeld in Saxony-Anhalt, but otherwise the Chinese have so far remained rather in the dark

Daimler invested €400 million in the manufacturer in July 2020 and received 3% of the shares in return, which translates into a €13.3 billion valuation

At the time, the Stuttgart-based company saw the deal as an important step in the realisation of its electric car strategy - in the medium term, Farasis should cover about half of Daimler's battery cell requirements

Now Farasis has apparently delivered the first cell samples to Daimler - and the horror is great: company officials speak of "considerable problems" without going into detail

The cells are apparently so bad that there is even talk of ending the cooperation

This could set Daimler boss Ola Källenius back in his electric car plans

The electric Mercedes EQC SUV has been on sale since May 2019, the electric EQV V-Class has been available since the beginning of 2020 and the electric EQA compact SUV and the electric EQS S-Class are coming soon

An EQB based on the GLB is also planned, with further vehicles based on the Electric Vehicle Architecture (EVA) coming later

These include the electric E-Class EQE and a matching SUV variant as well as the electric version of the GLS

The immediate electric future, however, is not affected by the Farasis problem, according to Daimler

Mercedes says that "the supply of our Mercedes EQ electric offensive is ensured"

"To this end, Mercedes-Benz has built up a well-functioning and very stable set of suppliers for battery cells. The partners manufacture innovative and powerful battery cells according to our specific specifications"

"The prerequisite for this is also always the Mercedes-Benz top quality worldwide with the same standard. We cannot confirm speculations about the quality of cell samples"

In an emergency, Daimler could still try to purchase more battery cells from its other cooperation partner CATL as a substitute - but CATL would then first have to adjust to the increased demand

Daimler discontinued its own cell production with its subsidiary Li-Tec from Kamenz in Saxony in 2015 for cost reasons

In the meantime, Deutsche Accumotive, a wholly-owned Daimler subsidiary, is again producing e-car batteries in Kamenz

In 2019, the company has already started up its second plant in the Saxon city, where it produces batteries for passenger cars and commercial vehicles - but no cells

CONCLUSION

With Farasis, Daimler is partly relying on a rather unknown producer who apparently has difficulties in producing usable battery cells

Since there is even talk of a possible failure of the cooperation, the Mercedes managers also seem to have little confidence in the future developments of Farasis

With CATL, another Daimler cooperation partner could compensate or at least mitigate the possible supply losses

Cell production is one of the most important issues in electric car manufacturing - no e-car can be delivered without a battery

Due to battery shortages, the production of electric cars has already come to a standstill at some manufacturers

That's why Daimler's top priority is to solve the Farasis problem - otherwise the company's ambitious electric car timetable may be thrown into doubt