Daimler And Evonik Form Battery Venture

German auto giant Daimler has taken a 49.9% stake in Li-Tec, the subsidiary of Evonik Industries that specializes in lithium-ion battery development. The deal forms a partnership aimed at pushing forward technology for lithium-ion battery cells and systems, a field in which Evonik has already invested nearly $100 million.

The partners plan to establish a second joint venture to develop and produce lithium-ion batteries for passenger vehicles, buses, and commercial vehicles. Daimler will hold 90% of the battery-production joint venture, when it is set up, and Evonik, the remaining 10%. According to the partners, "in the near future," Li-Tec cells will appear in electric vehicles made by Daimler's Mercedes-Benz division.

The partners cite forecasts for the high-performance lithium-ion battery market of more than $13 billion worldwide within the next decade. The market for battery raw materials should exceed $5 billion, they say. In Germany alone, the federal government is striving to see at least 1 million electric vehicles on city streets by 2020.

One candidate for lithium-ion battery operation is Mercedes-Benz's Concept BlueZERO passenger vehicle, on display now at the North American International Auto Show in Detroit. The concept car features three models, two of which sport lithium-ion batteries. They have a driving range of up to about 125 miles.

"With this shareholding in Li-Tec and the establishment of the battery joint venture, we are extending our leading position in the field of alternative drives," says Dieter Zetsche, chairman of Daimler and head of its Mercedes-Benz Cars.

"Evonik is the only company that can bring about commercial series production of battery cells of this kind," thanks to the ceramic separator they employ, Evonik CEO Werner M?ller adds. "We have the universal electric drive—suitable for everyday use, safe, affordable."

Daimler says that it has been developing electric vehicles for the past 30 years and that it has registered more than 600 patents associated with battery-powered vehicles. Of those patents, more than 230 are in lithium-ion technology, Zetsche adds.

Evonik took a 20% stake in Li-Tec in October 2007 and built up its ownership in several stages. Evonik and Daimler are now seeking a third shareholder in Li-Tec with expertise in electrical systems integration.