The just-announced Mercedes-Benz B-Class Electric Drive has an electric drive train designed by Tesla Motors. But, you wouldn’t know this from the press release because it says nothing about Tesla. Further, you wouldn’t know this from the on-board charging system, because it’s not going to use the Supercharger port, apparently. In any case, this is a very interesting electric car from a major major car manufacturer and we should see it as further endorsement of the idea that electric driven cars are here to stay.
The Mercedes-Benz B-Class Electric Drive is a Mercedes (see my writeup: Mercedes launching B-Class Electric Drive in 2014, starting in the U.S.), and the press release goes to great lengths to make it clear that design-wise this is a luxury car from one of the premium luxury car makers. What I’m more interested in is the drive train, performance, and the business side of this especially considering the Tesla connection and the big announcement Tesla will make on Tuesday.
The drive train is rated for over 100 kilowatts (133 horsepower) and over 310 Nm of torque. Range is estimated at 115 miles (US City) but this is not an official EPA range certification. Charging time is rated at under 2 hours with a 240 volt 40 amp connection.
Daimler’s press release only talked about charging time in connection with the voltage/amperage of the charging connection. Specifically, charging time for a range of 60 miles [US City] is USA: 2 h at 240 V/40 A, ECE: 1.5 h at 400V. It’s curious that the press release gives charging time not for a full recharge but for 60 miles of range.
This makes two automakers (Daimler and Toyota) to have adopted the Tesla drive train system, but not adopted the Supercharger system. The Toyota RAV4 EV I saw in March 2012 had a Supercharger port, but by May 2012 the production version they unveiled at EVS26 had a J1772 port. The Toyota RAV4 EV has a 40 amp charging system, just as the B-Class Electric Drive does.
This calls into doubt the piece I wrote up yesterday summarizing one theory on how Tesla will make the Supercharger network pay off with boatloads of money. That theory was that Tesla would be licensing out the Supercharger technology to other automakers, and thereby get a big licensing fee for every car they sell. But neither Toyota nor Daimler appear to be licensing the Supercharger technology.
Instead, Daimler is one of the proponents behind the SAE DC Fast Charging system (a.k.a. Combined Charging System). I’m not certain where Toyota stands on fast charging protocols. So while both companies have put in faster-than-usual J1772 charging support, they haven’t adopted the Supercharger.
The other piece I wanted to go over is the financial arrangement between Daimler and Tesla.
In, if I recall correctly, 2008, Daimler bought a chunk of Tesla Motors. In exchange, Tesla has had access to Daimler’s parts catalog and has been providing drive train development and components for some of Daimler’s electric cars including the Smart fortwo, A-Class, and B-Class electric vehicles.
Here’s some quotes out of Tesla’s 2012 10-K filing with the SEC:
Powertrain Development and Sales
In addition to our own vehicles, we also design, develop, manufacture
and sell advanced electric vehicle powertrain components to other
We have provided development services and full powertrain systems and
components to Daimler for its
Smart fortwo, A-Class, and B-Class electric vehicles. From May 2009
through December 2012, we provided approximately 2,700 battery packs and
chargers for the Smart fortwo and A-Class vehicles. We have completed
these programs and are now providing
development services to Daimler for its B-Class electric vehicle. We
also have developed a full electric powertrain system for Toyota for use
in its RAV4 EV and began shipping production systems to Toyota in 2012.
Our production activities under
this program are expected to continue through 2014.
We are continuing to perform our electric powertrain component and
systems activities principally out of our Palo Alto facility. This
facility, which also serves as our corporate headquarters, houses our
research and development services, including cell and component testing
and prototyping, as well as
manufacturing of powertrain components for sales to third parties.
Beginning in 2008, we commenced efforts on a powertrain development
arrangement with Daimler. In May 2009, we
entered into a development agreement with Daimler under which we have
performed specified research and development services for the
development of a battery pack and charger for Daimler’s Smart fortwo
electric drive. All development work
related to the development agreement had been completed as of
December 31, 2009. Through December 2011, we had sold over 2,100 battery
packs and chargers for the Smart fortwo electric drive program. In the
first quarter of 2010, Daimler engaged
us to assist with the development and production of a battery pack and
charger for a pilot fleet of its A-Class electric vehicles to be
introduced in Europe during 2011. A formal agreement for this
arrangement was entered into with Daimler in May
2010. In October 2010, we completed the development of the A-Class
battery pack and charger and began shipping production parts in February
2011. Through December 2011, we sold over 500 battery packs and
chargers for the A-Class EV program. In the
first quarter of 2010, we completed the development and sale of modular
battery packs for electric delivery vans for Freightliner, an affiliate
of Daimler. Freightliner plans to use these electric vans in a limited
number of customer trials.
development of a full
electric powertrain system for an additional Mercedes Benz vehicle from
Daimler. We are negotiating the agreement for production parts for this
In addition to the agreements described above, we have entered into an
exclusivity and intellectual property agreement (EIP Agreement) with
Daimler North America Corporation (DNAC), an affiliate of
Daimler, in which we agreed to begin negotiating in good faith to enter
into further agreements within certain strategic cooperation areas,
including technology collaboration in various electric powertrain areas,
automotive engineering support,
joint electric vehicle development efforts and access to component
parts for Tesla designed products. Under this EIP Agreement, we agreed
that, until November 11, 2009, we would not negotiate or enter into any
agreements with other parties that
would be competitive with the arrangements contemplated for these
strategic cooperation areas, unless the results of such arrangement
would be marketed solely under the Tesla brand. As of that date, we had
not executed any further agreements with
Daimler in the areas of strategic cooperation.
The EIP Agreement provides that ending July 2013, if the company
offer from a strategic competitor of Daimler to enter into an agreement
for development of a non-Tesla branded vehicle or an integrated
electric powertrain system, DNAC would be given the right of first
refusal to enter into such agreement with the
company instead of, and on the same terms offered by, the third party.
The EIP Agreement also provides that if we execute a
strategic cooperation agreement with DNAC to jointly engineer an
electric vehicle, then additional exclusivities would apply until July
2013, provided a minimum annual volume of sales is achieved. The EIP
Agreement provides that none of the
restrictions set out in that agreement, or in any strategic agreement,
would limit us from developing technology with any third party for use
in a Tesla-branded product or service or related to the Tesla Roadster
or Model S, engaging in any
transaction with a company that is not a Daimler competitor, or
supplying components for electric powertrains that are designed by third
The EIP Agreement also provides that if the parties enter into the
strategic agreements or further agreements, those agreements will
allocate intellectual property rights according to certain principles
outlined in the EIP Agreement. In addition, until July 2013, before
licensing intellectual property generated outside the scope of any
strategic cooperation area to a Daimler competitor, we would first have
to offer DNAC the right to license the
intellectual property on a non-exclusive, royalty-bearing basis, or on
an exclusive basis in the automotive field; and if DNAC requests the
latter, we must negotiate such a license in good faith. If no agreement
is reached, however, we would be free
to license the technology to the Daimler competitor, and DNAC could
take a non-exclusive license. Both we and Daimler have the right to
terminate the EIP Agreement in the event the other party undergoes, or
executes an agreement to undergo, a change
of control. Any strategic cooperation agreements entered into between
us and Daimler prior to termination will not be affected by such
To date, with the exception of the development agreement for the Smart
fortwo electric drive and the agreement for the development and
production of a battery pack and charger for a pilot fleet of
Daimler’s A-Class electric vehicles, the strategic agreements described
in the EIP Agreement have not been entered into, and there can be no
assurance that the parties will ever enter into such agreements. Even if
we were to enter into such
agreements, the parties may negotiate and agree to terms that are
different to those set forth in the EIP Agreement and outlined above.
Such different or new terms may be more or less favorable to us.
In addition to these agreements, Blackstar lnvestCo LLC (Blackstar), an
affiliate of Daimler, beneficially owned 4,867,929 shares of our
common stock as of December 31, 2012.
If we are unable
to grow our sales of electric vehicle components to original equipment manufacturers our financial results may suffer.
We may have trouble attracting and retaining powertrain customers which
could adversely affect our business prospects and results.
Daimler and its affiliates and Toyota and its affiliates are currently
the only customers of our electric powertrain sales and development
services. In 2012, we entered into a development agreement for the
development of a full electric powertrain
for a Daimler Mercedes-Benz B-class EV by the end of 2013. We have not,
however, yet completed our development activities or entered into an
agreement to supply Daimler with production electric powertrain systems.
Should this not occur, our future
sales growth and financial results would be adversely affected.
revenue decreased to $27.6 million for the year ended December 31, 2012
from $55.7 million for the year
ended December 31, 2011, due primarily to the completion of our
development activities for the Toyota RAV4 EV program during the first
quarter of 2012. In 2012, we began work on a full electric powertrain
under the Mercedes-Benz B-Class EV
program. The majority of our 2012 development services revenue was from
the achievement of milestones and deliveries of prototype samples to
Daimler under this program.
work on a full electric powertrain under the Mercedes-Benz B-Class EV
program. Under this program, we will continue to
provide development services and deliver prototype samples in 2013.
Similar to our previous development services agreements, due to timing
differences that may arise between the recognition of milestone revenues
and the underlying costs of
development services, the gross margin from our development services
activities may vary from period to period.
Mercedes-Benz B-Class EV vehicle. In 2012, we received two purchase orders from Daimler to begin
development work and
also entered into a separate development agreement under which we would
complete various milestones and deliver prototype samples. During the
year ended December 31,
2012, we recognized a total $15.9 million in development services
revenue related to the Mercedes-Benz B-Class EV program.
the first quarter of 2010, Daimler engaged us to assist with the
development and production of a battery pack and charger for a pilot
fleet of its A-Class electric vehicles to be introduced in Europe during
2011. We began providing development
services for this program during the first quarter of 2010 and had
received an aggregate of $5.5 million in payments; however, as we had
not executed a final agreement related to this program as of March 31,
2010, we deferred the
$5.5 million of payments that had been received from Daimler to that
point. In May 2010, we executed a final agreement under which Daimler
would make additional payments to us for the successful completion of
certain development milestones and
the delivery of prototype samples. As of December 31, 2010, we had
completed our deliverables under this agreement and for the year ended
December 31, 2010, we recognized $14.4 million in development services
Daimler A-Class Program
During the three months ended
March 31, 2010, Daimler engaged us to assist with the development and
production of a battery pack and charger for a pilot fleet of its
A-Class electric vehicles to be introduced in Europe during 2011. As of
December 31, 2010, all
development work related to the development agreement had been
completed, and we had recognized the full $14.4 million under the
Daimler Mercedes-Benz EV Program
During the fourth quarter of 2011,
Daimler engaged us to assist with the development of a full electric
powertrain for a Daimler Mercedes-Benz B-Class EV vehicle. In 2012, we
received two purchase orders from Daimler to begin development work and
also entered into a separate
development agreement. Pursuant to the development agreement, Daimler
will pay us up to $33.2 million for the successful completion of certain
at risk development milestones and the delivery of prototype samples.
During the year ended
December 31, 2012, we completed various milestones and delivered
prototype samples. During the year ended December 31, 2012, we
recognized $15.9 million in development services revenue related to the
Mercedes-Benz B-Class EV program.
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