Exclusive-China's Nio explores investment, tech alliances with Mercedes - sources

investing.com:

SHANGHAI (Reuters) — Nio (NYSE:NIO) has held exploratory talks with Mercedes-Benz (OTC:MBGAF) for a tie-up that would see the German automaker invest in the Chinese electric vehicle startup in exchange for technology, two people with direct knowledge of the matter said.

Nio's founder and chief executive William Li discussed the potential collaboration with Mercedes CEO Ola Kaellenius earlier this year, seeking an investment from the latter in exchange for loss-making Nio sharing its research and development capabilities with Mercedes, said the sources.

The talks did not reach a stage where details on the technology to be transferred and the potential financial investment were discussed, they said.

One of the sources said Nio approached Mercedes with the tie-up proposal, but cautioned that it was facing resistance within the German company which discussed it internally in recent weeks, and that it was highly likely it would not proceed.

It was unclear by when a decision on the tie-up would be reached.

Nio, when contacted, denied it talked to Mercedes on a collaboration, calling it «untrue», without elaborating. Mercedes said in a separate response that there were no collaboration plans with Nio at the moment. The sources did not wish to be named as the matter is private.

The Nio-Mercedes talks highlight the trend of closer collaboration between legacy automakers and new upstarts as cash-strapped Chinese EV companies seek to survive a consolidating domestic industry by touting innovations that they hope to sell to established automakers.

Chinese EV companies may also be able to navigate potential trade barriers better by forging such tie-ups.

For their part, many of the incumbents are scrambling to reposition themselves