Editing by Xin Lanhua

China's leading new energy vehicle maker BYD and German car giant Daimler reportedly signed an equity transfer agreement to allow BYD to take up 90% control of their lackluster joint venture Shenzhen Denza New Energy Automobile. Daimler remains a 10% equity partner.

Previously on December 24, BYD announced that BYD and Daimler planned for each party to increase the capital to Denza by RMB1 billion ($157 million). The two parties will continue to equally share the equities of Denza after this round of capital increase. Nevertheless, the latest equity transfer agreement indicates that the situation with Denza may undergo further changes.

Denza (Shenzhen Denza New Energy Automobile Co., Ltd. 腾势新能源) is a joint venture established in 2010 by BYD and Daimler, each with a capital of RMB300 million ($47.1 million). The joint venture is to design and make passenger vehicles, electric vehicles, automotive electric drivetrain systems, automotive power systems, and components for passenger cars with less than nine seats.

Denza performed well in its earlier years as one of the earliest starters in the new energy field and backed by automobile giants. But new players have emerged, and the market has become more competitive. By 2019, the sales of NIO had grown ten times that of Denza. The sales of Weltmeister and Xiaopeng have also left Denza far behind.

Although many people believed Denza would eventually withdraw from the market, BYD and Daimler have never given up. Since 2012, they have kept injecting new capital eight times while maintaining the equity ratio at 1:1.

From 2017 to 2019, Denza registered annual loss at RMB232 million ($36.4 million), RMB475 million ($74.5 million), and RMB549 million ($86.2 million).

In this period, Denza launched competing products for different market segments to meet new competitors, but its market shares were reduced. Analysts also attributed the lack of brand awareness and the sufficient R&D investment requirement in the initial stage to Denza's setback.

Founded in 1995, Shenzhen-based BYD is a world leader in EVs. BYD's innovative products are leaders in multiple sectors, including battery-electric automobiles, buses, medium- and heavy-duty trucks and forklifts; the SkyRail monorail system; solar power generation, and energy storage systems.