The Daimler-Bosch joint venture increased their original target of building 1 million engines by 2020, to 2 million units.
Last year Daimler and Bosch made an agreement to develop and manufacture electric engines for battery-powered cars beginning this year. The two companies said that the first to use the engines will be Daimler’s Smart and Mercedes-Benz brands, and the next level will include Bosch selling the engines to other automakers.
This joint venture between the premium automaker and the largest automotive supplier in the world, marks a strategic shift in the auto sector of utmost importance, as engine manufacturing was considered automakers’ core expertise. Usually western automakers purchase components from suppliers and then design and assemble the engines themselves.
Analysts believe that building engines for battery-powered cars has spurred a string of alliances between automakers and companies from other areas, including rental firms and battery makers. Alliances are not unusual for Daimler which already has a partnership with German industrial conglomerate Evonik to manufacture lithium-ion batteries, and another one with French mass carmaker Renault to build electric cars. Daimler also owns a stake in electric sports car maker Tesla and a JV with Chinese automaker BYD on an electric car brand in that country.