Daimler board approves €70 billion in investment

The Supervisory Board of Daimler has given the CEO Ola Källenius the green light for an investment package worth more than 70 billion euros. Daimler intends to invest this sum between 2021 and 2025, in particular, to drive forward electrification and digitisation.

According to the Group’s announcement, Mercedes-Benz Passenger Cars will account for the largest share of the investment projects. Daimler Trucks will also be able to accelerate plans for emission-free transportation within the framework of this business plan. In the communication, Daimler also refers to the “Strategy Update” from the beginning of October, when Källenius announced that he would reduce research and development spending and capital expenditure on property, plant and equipment in the passenger car division – in 2025, 20 per cent less is to be spent here than in 2019.

Daimler does not go into further detail in the announcement. For example, the exact breakdown of the investment sum now approved is still somewhat unclear. To be precise, it is unknown what budget is planned for the electrification of the passenger car division and Daimler Trucks. This week, premium competitor Audi approved an investment package of 35 billion euros up to 2025, ten billion of which will be spent on electric drives and five billion on hybridisation. However, these figures cannot be compared directly, since Audi can also draw on developments of the VW group, such as the MEB.

At the “Strategy Update” mentioned above, Källenius announced two new electric SUV models based on the EVA platform of the upcoming EQS, as well as a second electric platform for the compact and mid-size classes. The first production cars based on Mercedes-Benz Modular Architecture (MMA) are scheduled to be launched in 2025. The development of the MMA, therefore falls precisely within the period of current investment planning.

Besides, the company management and general works council have agreed to set up a transformation fund with a volume of one billion euros and a term until 2025. According to the Group, these funds are available in addition to the planned investments. The fund is to be used primarily to promote the further development of future technologies and to secure employment on the path of transformation at German locations.

However, there are still open points: The structure of this fund is to be determined by the operating parties in the first quarter of 2021. Recently, however, there have been strong differences between management and the works council.

In the statement, Group CEO Källenius and Works Council Chairman Michael Brecht are more conciliatory. “With this agreement, we are fulfilling our shared responsibility to shape the transformation of our company actively,” Källenius is quoted as saying. “Improving our profitability and targeted investment in Daimler’s future go hand in hand.”

Brecht added: “After controversial discussions in recent weeks, we have achieved that, in addition to the Daimler investment plan, a transformation fund of €1 billion is to be established. The General Works Council has called for this transformation fund to enable additional investment in the ongoing development of our sites”. With these additional funds, he said, we have “opportunities to implement new technologies and products in our plants.”

Former BMW and VW CEO Pischetsrieder to become head of the board

It is also becoming apparent who is to be the new chief supervisor at Daimler: The Supervisory Board has agreed that the former Chairman of the Board of Management of BMW and Volkswagen, Bernd Pischetsrieder, should become the new Chairman of the Supervisory Board. The former Chairman of the Supervisory Board, Manfred Bischoff, will retire on account of his age at the Annual General Meeting on March 31, 2021.

“He has been closely involved in the decisions to digitise the Group and to electrify and thus refocus the product portfolio,” said Manfred Bischoff in a statement on Bernd Pischetsrieder. Pischetsrieder has been a member of the Supervisory Board since 2014. In September, former CEO Dieter Zetsche, who had actually been earmarked for the post, had resigned from it after increasing criticism of his time on the Board of Management.

With reporting by Sebastian Schaal, Germany.

daimler.com (business plan), reuters.com, daimler.com (board)