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Denza May Become BYD's Luxury Brand With Daimler Practically Exiting the JV

You can tell the same story in multiple ways. Western media reported that Daimler restructured its stake in Denza, a joint venture with BYD. The Chinese websites went straight to the point: Daimler practically left the company, retaining only 10% of its shares. Both missed what may be behind the move: BYD’s new luxury brand.
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Photo: Denza
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According to Yicai Global, Denza was established in 2010 as the first joint venture dedicated to electric cars. Reuters says it dates from March 2012 and that BYD and Daimler had equal shares in the company: 50% percent for each of them. The issue is that all cars presented by Denza (the 300, 400, 500, and the Denza X) were costly, which reduced sales volumes to only 1,000 units per month. At the time, interest in EVs was also not that high.

That did not prevent Daimler and BYD from having to make continuous capital injections in the company for research and development. For the German carmaker, it became a money drain. For BYD, it may have always been a strategic investment, especially now that the company has a new platform and a battery pack in which it trusts a lot.

There are rumors that BYD is developing a luxury brand for new electric cars based on e-platform 3.0. These cars will use the Blade Battery, an LFP battery pack that is said to last 1.2 million kilometers (745,645 miles). Apart from robustness, it also has no issues with fast charging. It even prefers to be charged to 100% of capacity – something ternary lithium-ion cells are not very comfortable with.

The only penalty with the Blade Battery is the lower energy density of LFP cells. Still, BYD has tackled that with CTP (cell-to-pack), a construction method that makes them be part of the battery pack structure, which saves weight and increases energy density.

With Daimler giving up on Denza, BYD could perfectly use the brand to present these new luxury products it is developing. After all, why would it keep Denza alive and deliver yet another brand to compete with it? It does not seem to make sense unless the Chinese market is so big that BYD is confident it can have multiple brands competing with each other.

When Alfred P. Sloan organized GM’s brands in six different price ranges, he made the company’s own brands compete in a limited way: the top models from one brand competed with entry-level vehicles offered by the brand in the immediately higher price range. In other words, Chevrolet competed with Pontiac, Pontiac with Oldsmobile, Oldsmobile with Buick, and Buick with Cadillac – but only to a limited extent.

In BYD’s case, having a different luxury brand would most certainly have to follow the same strategy, but would that make sense at this point? We’ll soon learn about that. However, we’ll stick to the bet that Denza may become BYD’s luxury brand. Let’s see what happens next.
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About the author: Gustavo Henrique Ruffo
Gustavo Henrique Ruffo profile photo

Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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