SHANGHAI/BERLIN (Reuters) – Mercedes-Benz is betting on China’s Momenta to help it regain market share in the world’s largest car market, with plans for new investments and at least four future models to leverage the autonomous driving startup’s software use, three knowledgeable sources said.
The plans, which have not previously been reported, will make autonomous driving developer Momenta the first Chinese supplier chosen by Mercedes as the primary supplier of a key technology and selling point for its products, as fierce competition and technological innovation in China drive Western countries are forcing automakers to rethink their supply chain strategies.
The German premium automaker has invested in Momenta since 2017, but the two companies have yet to publicly announce any co-developed products.
In the years since, the Chinese company has become one of China’s leading suppliers of advanced driver-assistance systems (ADAS), similar to Tesla’s full self-driving system, which can navigate city traffic under the supervision of human drivers.
Mercedes plans to make a new $75 million investment in Momenta and could invest more as a cornerstone investor in Momenta’s initial public offering, scheduled for the first quarter of 2025, the sources said.
It has chosen Momenta as its ADAS supplier for four models to be launched in China from 2025 to 2027 and is internally discussing whether Momenta software will be used in more Chinese models after 2027, one of the people said.
It is also working with Momenta on preliminary plans to use the Chinese supplier’s technology in Mercedes models outside China, two of the people said.
Mercedes and Momenta declined to comment.
Mercedes has also been exploring ADAS options with US artificial intelligence chipmaker Nvidia as part of a partnership announced in 2020, when they said they would develop Mercedes-Benz vehicles with upgradable automatic driving features. However, the companies have not yet unveiled any products.
BEHIND IN CHINA
Mercedes is playing catch-up in China in both electric vehicles and smart driving software, led by Tesla, Nio and Xiaomi.
Just 3% of the 443,764 cars Mercedes sold in China this year were electric vehicles, according to the China Association of Automobile Manufacturers, less than a tenth of Nio’s sales.
Automakers in China are engaged in a race for autonomous driving, with BYD hiring thousands of engineers to ramp up internal development of such software. Nio, Xpeng and Xiaomi are developing their own ADAS chips that can achieve better smart driving performance with their electric vehicles.
The trend has also helped Chinese ADAS vendors Momenta, Huawei and DeepRoute.ai quickly acquire customers from automakers and integrate different vehicle models into their systems.
Momenta customers include BYD, SAIC and Audi in China. Momenta’s biggest investor in automakers is China’s SAIC, while other backers include General Motors and Toyota.
(Reporting by Zhang Yan, Brenda Goh, Victoria Waldersee and Christina Amann; Editing by Rod Nickel)
