BERLIN -- A tense atmosphere prevailed at Daimler's general shareholders meeting here on April 5, despite the company's record earnings in 2017. Eyes were on Li Shufu, chairman of Chinese automaker Zhejiang Geely Holding Group and now the top shareholder in the German automaker.
Daimler management has grown a little wary of Li, believed to be interested in such next-generation automotive technologies as electric vehicles and connected cars.
The crowd of 6,000 immediately fell silent as Dieter Zetsche, chairman of Daimler's board of management, opened his speech by talking about Geely, to the surprise of many. Daimler management chose to jump right to what the audience was most interested in. But Zetsche stopped short of discussing anything new, saying only that talks with Li were positive and that Daimler would explore areas where the two companies can cooperate -- largely repeating what he had said before.
A skeptical shareholder asked whether Geely could be a wolf in sheep's clothing. Stockholders are increasingly wary of Li, who in February became Daimler's top shareholder with a nearly 10% stake.
Western media report that Li proposed in 2017 that Daimler issue new shares in a private placement to Geely, but was rejected. He then changed tack and started to amass Daimler shares behind the scenes through an investment company.
What is Li's aim, which made him so focused on acquiring such a big chunk of Daimler?
In a February article in German Sunday newspaper Bild am Sonntag, Li expressed an ambition to tie up with Daimler in next-generation technologies, including connected cars. A prevalent industry view, however, is that Geely's main target is Daimler electric-vehicle technology. The Chinese company bought Sweden's Volvo Car in 2010 and acquired 49% of Malaysian automaker Proton Holdings in 2017. These acquisitions have helped improve Geely's assembly and design, but a key target has been to upgrade its technology for electric vehicles. Putting more electric vehicles on the road is a major policy goal of the Chinese government.
In China, a program that imposes on automakers production and sales quotas for new-energy vehicles, including electric, hybrid and fuel cell cars, will start in 2019. Among local rivals of Geely, BYD is boosting its presence in electric vehicles. Japan's Nissan Motor and Germany's Volkswagen have large investment plans to bolster electric-vehicle production with their respective local partners.
But whether Daimler will readily work with Geely in electric vehicles is not clear. This is because the company has already announced plans to jointly invest 5 billion yuan ($794 million) with local partner Beijing Automotive Group to boost electric-vehicle production in China. It is believed that Daimler will likely prioritize plans with the partner in a local joint venture over anything that may come out of talks with Geely. Should Geely decide that talks with Daimler are going nowhere, the Chinese company may resort to such steps as demanding a board seat for a Geely executive. This possibility is making Daimler management uneasy.
Apparently anticipating such sentiment and trying to avoid a negative reaction, Geely has maintained a low profile since Li's acquisition of the largest stake in Daimler was announced in late February. But the rise of electric cars in China is waiting for no one.
At a March 21 earnings announcement, Gui Shengyue, CEO of Hong Kong-listed arm Geely Automobile Holdings, declined to comment. "It is not appropriate to unfold a debate on this, and I wish you all could wait and see how things develop," Gui said.