Mercedes To Take Major Stake In Aston Martin In Supply Of EV Technologies

Aston Martin Vanquish Vision Concept

Mercedes-Benz AG and Aston Martin have come on terms with a mutually beneficial agreement as technologies, vehicle components and powertrains will be shared

Mercedes-Benz AG and Aston Martin Lagonda have revealed in a statement about a new strategic agreement as part of enhancing their partnership. The German conglomerate has grant access to a range of advanced Mercedes-Benz technologies and they include next generation hybrid and electric powertrains along with vehicle components and systems.

The partnership carries mutual benefits as access to the technologies comes in exchange for shares in the performance carmaker, Aston Martin. It is issued in many stages over the next 36 months, valued up to GBP 286 million (Rs. 2,757 crore approximately). Mercedes-Benz AG’s shareholding stands at 2.6 per cent of Aston Martin’s common equity at present.

The new shares will take Mercedes-Benz AG’s holding up to a maximum of no more than 20 per cent and the company has insisted that there is no more intention in increase its holding in Aston Martin. Back in 2013, Mercedes-Benz AG and Aston Martin agreed for the supply of AMG engineered V8 powertrains and supply of components for electric architecture.

Aston Martin Vanquish Vision Concept 3

Mercedes-Benz AG gained an equity participation of 5 per cent in Aston Martin and following the British brand’s IPO two years ago and considering various other financing rounds, Mercedes-Benz AG now owns a 2.6 per cent stake. Only this year, the discussions on the partnership expansion began. Initially, AM requested access to certain engines and powertrain software.

The new shares will be allotted to Mercedes-Benz AG by means of a Contribution in Kind and it will not involve any cash consideration from the brand, as the total CiK value of GBP 286 million will be required to achieve the maximum agreed shareholding of 20.0 per cent in Aston Martin.

Aston Martin Vanquish Vision Concept 1

The shares to be provided to Mercedes-Benz AG in return for Tranche 1 technology will help in increasing Mercedes-Benz AG’s shareholding to 11.8 per cent. Furthermore, the parties need to agree on the scope of technology made available to Aston Martin. The supply of the aforementioned technologies and components will be on agreed commercial terms.

Courtesy of the new deal, Aston Martin has set an ambitious target of selling around 10,000 vehicles (nearly twice compared to last year) per annum by 2025. It is targetting revenues of around £2 billion and EBITDA profits of around £500 million.