Daimler will increase its stake in the struggling sports car group Aston Martin to 20 per cent in exchange for the UK manufacturer securing access to the German group’s electric vehicle technologies.
The two companies first joined forces in 2013, when Daimler took a 5 per cent stake and worked with the British brand on engine development. After Aston Martin’s disappointing initial public offering in 2018, and subsequent capital increases, Daimler’s stake was diluted to about 2.6 per cent.
Under the terms of an agreement on Tuesday, the Stuttgart-based group, which owns Mercedes-Benz, said that it would be handed new shares worth up to £286m in Aston Martin in a move that would leave Daimler with a stake of no more than 20 per cent over the next three years.
Aston Martin, which has been haemorrhaging cash, was rescued by Canadian billionaire Lawrence Stroll this year, but is lagging behind rivals when it comes to investing in emissions-free technology.
At Mr Stroll’s insistence, the group — whose cars are a staple of the James Bond film franchise — shelved plans to build its first electric car, the Rapide-E, and said it would not offer a battery-powered model until the middle of the decade.
In contrast, Daimler is spending billions of euros on building dozens of electric and hybrid cars, including in its luxury sub-brands AMG and Maybach.
Alongside the deal with Daimler, Aston Martin announced it had secured £125m in financing via an equity increase, with the new shares bought by a consortium led by Mr Stroll, the European family office Zelon Holdings and Permian Investment Partners.
“This is a transformational moment for Aston Martin,” Mr Stroll said. “We now have the right team, partner, plan and funding in place to transform the company to be one of the greatest luxury car brands in the world.”
The British group also announced it was targeting adjusted pre-tax earnings of £500m by 2024/25, almost four times its current annual profits.
The group aims to deliver 10,000 models a year, up from fewer than 6,000 in 2019. SUVs would make up the largest chunk of those sales, said Mr Stroll, and between 20 per cent to 30 per cent would be hybrid vehicles.
However, newly-installed chief executive, Tobias Moers, who joined Aston Martin from Mercedes-AMG, said the tie-up would not accelerate the Vantage maker’s electric vehicle plans, and that a battery-powered model would not be released before at least 2025.
“The capabilities of Mercedes-Benz AG technology will be fundamental to ensure our future products remain competitive and will allow us to invest efficiently in the areas that truly differentiate our products,” said Mr Moers.
The deal, however, comes with some safeguards for Daimler. If Aston Martin’s shares fall below Daimler’s entry price, it will have to compensate the German company in cash for its technology.
Separately, Aston Martin posted a £29m pre-tax loss for the third quarter, down from a profit £43m in the same period last year.
In an effort to break into an increasingly lucrative market, Aston Martin launched its first sport utility vehicle, the DBX, this summer. The company said the model was currently sold out through the first quarter of next year.
Mr Moers said the factory at St Athan, Wales, which is producing the DBX, is now running at full rate, and that the company had managed to reduce the number of cars sitting in dealerships by 1,400 so far this year, helping it to control pricing.
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