German automaker Daimler AG, known mostly for its Mercedes-Benz cars, is raising its stake in British carmaker Aston Martin Lagonda Global Holdings. The company confirmed it plans to increase its holdings in Aston Martin from 5% to 20% in "stages."
Under the "strategic technology agreement," Aston Martin will be given access to more of Daimler's technologies in exchange for the increased stake among other transactions. This will include giving the British company access to its hybrid and electric engines up to 2027.
"The capabilities of Mercedes-Benz AG technology will be fundamental to ensure our future products remain competitive and will allow us to invest efficiently in the areas that truly differentiate our products," Aston Matin's chief executive officer, Tobias Moers, said in a statement.
Cash-strapped Aston Martin, which has been losing money since its stock market floatation, will stand to greatly benefit from the deal. Apart from saving money in research and development, the company now has the option to spend on other measures to promote its brand.
Moers said that the partnership should allow it to achieve its goal of having a quarter of its products be electric and hybrid vehicles by 2024. This will include its recently unveiled plug-in hybrid Aston Martin DBX and its hybrid Vanquish, Valkyrie and Valhalla supercars.
Despite its financial problems, Moers said that the company is confident in the outcome of its long-term strategy. He added that Aston Martin plans to greatly increase its revenues to more than $2.6 billion and profits to more than $650 million over the next five years.
Mercedes-Benz Cars' head of product strategy, Wolf-Dieter Kurz, mentioned in a statement that the partnership should allow Aston Martin to leverage the company's advanced technologies to further elevate its brand.
Since it listed its shares in London in 2018, the company's stock prices have tumbled to unprecedented lows over fears of its continually falling sales and rising costs. After its former chief executive officer, Andy Palmer, exited the company in May, Aston Martin's stock prices had dropped by more than 94%.
News of the partnership managed to slightly increase the company's stock price from £54.55 per share at Tuesday's closing to £61.50 per share at Wednesday's opening. The stock closed lower at £59.19 per share at the end of the day.