BAIC Buys 5% Stake in Daimler

China’s BAIC Group (Beijing Automotive Industry Holding Co.) has acquired a 5% stake worth €2.5 billion ($2.8 billion) in Daimler AG.

Daimler CEO Ola Kallenius welcomed BAIC’s investment, praising it as reinforcement of their 16-year-old partnership.

The two companies operate the Beijing Benz Automotive Co. joint venture, which assembles Mercedes-Benz C-Class and E-class sedans and GLA and GLC SUV/crossovers. Reuters reported in May that BAIC intended to take a position in Daimler to defend the alliance.

BAIC’s confidence in Daimler was shaken last year when Li Shufu, the chairman of rival Zhejiang Geely Holding Group Co., quietly amassed a 9.7% stake in Daimler. Li’s hope is to partner with the Germany company on electric and autonomous vehicles.

In March Geely and Daimler confirmed they were forming a 50:50 joint venture to revive Daimler’s Smart city car business as an all-electric brand. Two months later, the two companies launched a mobility services venture in China.

Daimler has repeatedly assured BAIC that its Mercedes-Benz unit will not form any new industrial alliances with Chinese companies without its partner approval.