The smart brand is facing a new beginning. The 50-50% joint venture between Daimler and Geely radically transforms the smart brand, which becomes an electric brand and production will take place exclusively in China. The big news will be the expansion of the range with a smart SUV designed by Mercedes like all other smart models.
In January 2020, Daimler and Geely announced the details of the new joint venture. In the new joint venture owned 50-50% by Daimler and Geely, each company came with an investment of 350 million euros. Geely will be in charge of production, while Mercedes is responsible for development.
The joint venture will materialize in the construction of a new plant in China where all smart models will be built in the future by Geely while the development is the responsibility of Mercedes. The smart models will have exclusively electric propulsion being the first 100% electric brand.
smart SUV for the first time
The range will consist in the future from three models:
– smart fortwo,
– the new smart forfour that will be slightly larger and it seems that it will compete in the small class
– an SUV that is indispensable to the Chinese market but not only.
With these three models but also with a cheaper production in China, smart brand hopes to become profitable.
The current smart fortwo will continue to be produced at the plant in Hambach, France, until the launch of the new model. After the completion of the production of smart fortwo, Hambach will produce the new compact electric models Mercedes EQA and EQB which are in fact the electric versions of Mercedes GLA and GLB. Mercedes has invested 500 million euros in Hambach to secure the future of the plant in France.
Instead, after the production of the current smart forfour, assembled in the plant in Novo Mesto, Slovenia, by Renault together with Renault Twingo, Mercedes will give up this partnership.
Why didn’t the smart brand succeed?
The smart brand has never been profitable. The reasons are many:
– the model policy was wrong
– choosing Mercedes as a partner was not the best solution given that smart initiator Nicolas Hayek did not want a premium car but an accessible city car
– the lack of an electric model from the beginning which would have fitted like a glove to the urban character of the brand.
Let’s take them one by one.
The model policy was wrong because the smart Roadster/Coupe was not the ideal solution to expand the brand’s portfolio. The quality was bad, the price was high, the image of a sport brand practically did not exist.
There were plans for a SUV called Formore that were mistakenly stopped in April 2005 because the brand had losses.
Mercedes wanted to turn smart into a premium model, although the initiator of the idea, Nicolas Hayek, CEO of Swatch Group, wanted an affordable urban model that would solve the congested traffic in the cities.
The launch of an electric model was delayed unacceptably long, although Nicolas Hayek wanted it from the first moment. Even now, smart does not have a high-performance electric model, with low electrical range and charging only at AC stations with a low speed.
The last attempt to make the smart brand profitable through cooperation with Renault was a failure. For Renault, Twingo is not a model of great interest and the French are not going to invest in a new model, as evidenced by the fact that they shrugged when Mercedes asked them to start conceiving a successor.
Geely has solid expertise in electric propulsion
It seems that now Geely is the ideal partner, especially since they own 9.7% of Daimler since 2018. Geely’s owner, Li Shufu is the embodiment of the American dream. The son of a rice farmer, Li Shufu began producing refrigeration components after studying mechanical engineering.
In 1992 he started producing motorcycles and in 1998 he produced the first car. The fact that Li Shufu was passionate about Mercedes is also proved by the fact that Geely’s first model was an unsuccessful copy of the Mercedes C-Class for which Li Shufu was sued by Mercedes.
20 years later, LiShufu came to own the Geely Automotive Holdings empire, which includes the Proton/Lotus, Volvo Lynk & Co., Terrafugia (flying machines) and other esmall electrrical start-ups.
Geely already has solid expertise in electric propulsion with the intention of launching 30 electric models in the next years. The Kandi brand is preparing to launch in the US the two-seater electric model K22 which will cost before the application of subsidies 18,995 USD.
The platform for the future smart fortwo/forfour could also be used for other Geely brands: Panda, LEV, Volvo, proton.
So, after 25 years in which the smart brand struggled to impose itself without great chances, now it has a new chance conferred by the partnership with Geely. It seems that Geely has the same plans that the visionary Nicolas Hayek had 25 years ago that fit perfectly with the new electric era.