Mercedes to take major Aston Martin stake as part of new technical partnership

3 years ago - 30 October 2020, autocar
Mercedes to take major Aston Martin stake as part of new technical partnership
British firm to gain access to technologies including electric and hybrid powertrains under expanded agreement

Mercedes-Benz will take a major stake in Aston Martin as part of a “truly game-changing” strategic technology agreement that will underpin a plan for the British brand to double its sales by 2025.

The agreement expands the existing relationship between the two firms and will include Aston Martin gaining access to Mercedes technology - including electric and hybrid powertrains - that will form a key part of its expansion plans.

Aston Martin said the deal included "powertrain architecture (for conventional, hybrid, and electric vehicles) and future-oriented electric/electronic architecture for all product launches through to 2027."

While the firm declined to outline exactly what products were planned under the new agreement, new Aston Martin CEO Tobias Moers said that the first Aston Martin cars utilising technology from the deal would be launched late next year.

He said that "it needs a little time to get the technology in different products" but added there would be "a kind of product firework in 2023".

With the new agreement in place, Aston Martin has targeted selling around 10,000 vehicles a year by 2025 and is aiming for revenues of around £2 billion and EBITDA profits of around £500 million. For comparison, the marque sold 5862 cars in 2019.

Lawrence Stroll, whose investment consortium completed its takeover of Aston Martin earlier this year, said that the 10,000 sales would be comprised of front- and mid-engined sports cars and "a portfolio of SUV products", hinting at new models joining the recently launched DBX. Around 20-30% of Aston Martin's sales by 2024 will be hybrid models. Stroll said the firm didn't plan to launch a full EV until 2025.

In return for the technology, Mercedes will gradually increase its stake in Aston Martin up to a maximum of 20%, providing a welcome boost in investment for Aston Martin and making the German giant one of its largest shareholders. The technology will be supplied "on commercial terms". Mercedes previously owned around 2.3% of Aston Martin shares as part of a deal that involved its AMG performance arm developing a bespoke V8 for the company.

Stroll called the agreement “a transformational moment”. He added: “Through this new expanded agreement, we secure access to world-class technologies to support our long-term product expansion plans, including electric and hybrid powertrains, and this partnership underpins our confidence in the future.

“This is truly game-changing. We now have the right team, partner, plan and funding in place to transform the company to be one of the greatest luxury car brands in the world.”

Moers, who joined Aston Martin from his previous role as the head of AMG, said: “We have updated our plans for the business, incorporating the benefits of our enhanced partnership we are announcing today. We're targeting delivery of significant growth and margin expansion in the medium term, not just through product expansion but also by incorporating a strategy to deliver a level of operational excellence and efficiency throughout every aspect of the organisation.

“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.”

While the deal will give Aston Martin access to Mercedes powertrains and technologies, these will be installed in Aston Martin-built cars that will continue to utilise the British firm's platforms and technology in other areas. Stroll insisted the firm would continue to produce all its own vehicles at its Gaydon and St Athan plants.

Mercedes product strategy chief Wolf-Dieter Kurz said: "With this new expanded partnership, we will be able to provide Aston Martin with access to new cutting-edge powertrain and software technologies and components, including next-generation hybrid and electric drive systems. Access to this technology and these components will be provided in exchange for new shares in Aston Martin."

Aston Martin launched the DBX SUV this year, which will play a major role in growing sales in the future. The new deal is a huge boost to Aston Martin's future plans, giving it access to proven EV technology without the need to develop its own EV systems.

Since taking over, Stroll has suspended plans to relaunch the Lagonda brand as a range of luxury EVs.

Moers said the plan for Lagonda to become Aston Martin's EV flagship had been abandoned but hinted that there's still a future for the historic name, saying: "Lagonda is not any more the brand for electric cars. Lagonda has a different purpose for the future. Electric cars are supposed to be an Aston Martin."

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