Daimler and Geely are setting up ride-hailing joint venture in China

Germany’s Daimler is forming a ride-hailing joint venture in China with Geely Group, in an indication the Chinese firm is making progress in its drive for closer relations with the German automaker.

Geely Chairman Li Shufu took a 9.69 percent stake in Daimler previously this year, rekindling worries in Germany about its highly-prized expertise entering into Chinese hands.

Daimler at first balked at the prospect of a broad based alliance, in part for worry of alienating Mercedes’ present Chinese partner BAIC.

The German company stated on Wednesday it would collaborate with Geely in China’s ride-hailing market, headed by Didi Chuxing.

Ride-hailing represents for over 30 percent of the worldwide taxi market and Goldman Sachs considers it could grow eightfold to $285 billion by 2030, with major growth potential in China.

“The JV (joint venture) will provide ride-hailing mobility services in several Chinese cities using premium vehicles including but not limited to Mercedes-Benz vehicles,” Daimler stated.

The 50:50 venture will be headquartered in Hangzhou, China, and utilize Mercedes-Benz S-Class, E-Class and V-Class vehicles along with other vehicles. Financial terms and the investment plans were not revealed.

Didi, founded in 2012, established its dominance in China when it purchased Uber’s operations in the country in 2016. It is gearing up to launch on-demand transport services like car-sharing.