Aston Martin is getting hybrid and EV tech from Mercedes in exchange of a 20-percent share

Back in 2013, Aston Martin and Mercedes-Benz entered a cooperation through which the British company gained access to the 4.0-liter V-8 AMG engine and various components for its production models. In exchange, Mercedes-Benz received an equity participation of five-percent in Aston Martin, which eventually transformed into a 2.6-percent stake. Earlier in 2020 we heard rumors that Aston Martin needs to develop its own engine as Mercedes is slowly phasing out the AMG V-8, but it seems that the companies are actually taking their partnership further. Aston Martin is set to gain access to new Mercedes technologies, which in turn will receive new shares in the British firm.

Aston Martin will use hybrid and all-electric technology from Mercedes-Benz

The British automaker will be granted access to all sorts of new tech over the next three years. According to Mercedes-Benz, Aston Martin will have access to the brand’s next-generation hybrid and electric powertrains, as well as "other vehicle components and systems." This basically means that as the 4.0-liter V-8 engine that Aston Martin currently borrows from Mercedes will be phased out, it will be replaced with hybrid and electric drivetrains. There’s no specific information on whether this also means that Aston Martin will soon use mild hybrid system that include the V-8 engine, but it’s a possibility.

Mercedes will transfer technology to Aston Martin in several tranches by 2023, most likely as they become available in new Mercedes-Benz cars. In return, Mercedes-Benz will receive new shares in Aston Martin. The shares will also be transferred gradually, as Aston Martin receives technology packages from the German firm.

Mercedes-Benz will eventually own 20 percent of Aston Martin

Aston Martin To Inherit Mercedes Tech, But The Cost Could Be Too High
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In exchange for the drivetrain components and technology, Mercedes-Benz will get a sizable portion of Aston Martin shares. Mercedes’ shareholding in Aston Martin will increase up to a "maximum of no more than 20 percent," which means that the Germans will get an additional 17.4-percent stake by 2023. Mercedes-Benz made it clear that "it has no intention to buy more than 20 percent" in Aston Martin, so there won’t be a takeover in the future. The shares that Aston Martin will transfer to Mercedes-Benz are worth about £286 million, which converts to around $370 million as of October 2020.

The main terms and conditions for the first technology package and share transfer have already been agreed. According to them, Mercedes-Benz will increase its shareholding to 11.8 percent in the first stage. The value of the first tranche is £140 million (about $181 million). The first exchange will probably happen in 2021.

Aston Martin To Inherit Mercedes Tech, But The Cost Could Be Too High
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The cooperation between Mercedes-Benz and Aston Martin goes back to 2013 and resulted in the British firm gaining access to electrical components for its new platform and the twin-turbo, 4.0-liter V-8 engine developed by AMG. In return, Mercedes-Benz AG received an equity participation of five percent in Aston Martin. Following Aston Martin’s IPO in 2018 and various financing rounds, Mercedes-Benz owns a 2.6-percent stake as of October 2020.

The AMG M177 V-8 engine debuted in 2015 in the Mercedes-AMG GT sports car and eventually found its way into AMG versions of the C-Class, E-Class, and S-Class, as well as SUV models from the GLC, GLE, and GLS lineup. The same engine motivates the boxy AMG G 63, the AMG GT 4-Door Coupe, the Mercedes-Maybach GLS 600, and the upcoming AMG S 63e hybrid. Aston Martin is offering it in all of its models save for the DBS Superleggera. The AMG V-8 powers the Vantage, DB11, and the DBX.

Is Aston Martin going hybrid with help from Mercedes-Benz?

2022 Mercedes-AMG S 63 e Exterior Spyshots
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There’s no official confirmation, but this is probably the plan. Aston Martin will probably gain access to the new hybrid setup that Mercedes-Benz is getting ready to introduce with the upcoming AMG S 63e. A replacement for the old S 63, the S 63 will retain the twin-turbo, 4.0-liter V-8, but it will combined it with an electric motor. Rumor has the S 63e will deliver around 700 horsepower, with more than 130 horses coming from the electric motor. That’s powerful enough for an Aston Martin and the combo might even replace the company’s twin-turbo, 5.2-liter V-12. There are also rumors about an even more powerful AMG hybrid called the S 73e. This version would feature the same V-8 - electric setup, but updated to an impressive 805 horsepower. This powertrain could also find its way into range-topping Aston Martin models or even future sports cars.

Ciprian Florea
Ciprian Florea
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Ciprian's passion for everything with four wheels (and more) started back when he was just a little boy, and the Lamborghini Countach was still the coolest car poster you could hang on your wall. Ciprian's career as a journalist began long before earning a Bachelor's degree, but it was only after graduating that his love for cars became a profession.  Read full bio
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Mercedes-Benz AG and Aston Martin Lagonda to expand and enhance their existing technology partnership.
Strategic Cooperation Agreement signed that will provide Aston Martin with access to new Mercedes-Benz technologies and components.
Access to these new technologies and components will be provided in exchange for new shares in Aston Martin; the supply of these new technologies and components will be on agreed commercial terms.
New shares will be issued in several stages over the next 3 years, taking Mercedes-Benz AG’s shareholding in Aston Martin up to a maximum of no more than 20.0%.

Stuttgart (Germany) - Mercedes-Benz AG and Aston Martin Lagonda Global Holdings plc (“Aston Martin”) have announced a new strategic technology agreement and an enhanced partnership. The new agreement will see Mercedes-Benz AG grant access to a range of advanced Mercedes-Benz technologies, including next generation hybrid and electric powertrains, as well as other vehicle components and systems.

Access to these technologies will be granted in exchange for new shares in Aston Martin, issued in several stages over the next 3 years, up to a total value of GBP 286 million. Mercedes-Benz AG’s current shareholding stands at 2.6% of Aston Martin’s common equity. The new shares to be issued will take Mercedes-Benz AG’s holding up to a maximum of no more than 20.0%. Mercedes-Benz AG has no intention to increase its holding in Aston Martin beyond this level.

Wolf-Dieter Kurz, Head of Product Strategy at Mercedes-Benz Cars, commented: “We already have a successful technology partnership in place with Aston Martin that has benefited both companies. With this new expanded partnership we will be able to provide Aston Martin with access to new cutting-edge technologies and components, including next generation hybrid and electric drive systems. The supply arrangements for these new technologies will be on agreed commercial terms. We look forward to continuing to work together with Aston Martin and we wish the company every success in its next stage of growth.”

Background

In 2013, Mercedes-Benz AG and Aston Martin entered into a strategic cooperation for the supply of AMG V8 engines and the supply of components for the E/E (electrical) architecture. In return, Mercedes-Benz AG received an equity participation of 5% in Aston Martin. Following Aston Martin’s IPO in 2018 and various further financing rounds, Mercedes-Benz AG now owns a 2.6% stake.

Key terms of the new agreement

During 2020, negotiations regarding the expansion of the existing cooperation were initiated. In a first step, Aston Martin requested access to certain engines and powertrains as well as powertrain software, E/E architecture and various other components. Mercedes-Benz AG has agreed to provide such technology access to Aston Martin in exchange for additional new shares in Aston Martin, which will be allotted to Mercedes-Benz AG by means of a Contribution in Kind (“CiK”). The arrangement will not involve any cash consideration from Mercedes-Benz AG. The supply of the systems and components will be on arm’s length terms

A total CiK value of GBP 286 million will be required to achieve the maximum agreed shareholding of 20.0% in Aston Martin. Mercedes-Benz AG has no intention to increase its holding beyond this level. The new shares shall be issued to Mercedes-Benz AG in several tranches by 2023, tied to the release of various technology packages.

The main terms and conditions for the first technology package and share tranche have already been agreed. The value for the Tranche 1 technology is GBP 140 million. The shares to be issued to Mercedes-Benz AG in return for Tranche 1 technology will increase Mercedes-Benz AG’s shareholding to 11.8%. For further tranches, the parties need to agree upon the scope of the technology to be made available to Aston Martin, the respective value (“entry fees”) and the piece prices of components and systems.

The planned continuation and enhancement of the cooperation with Aston Martin will result in further sales of components and systems for Mercedes-Benz AG, as well as the potential upside of any increase in the value of the enlarged shareholding in Aston Martin.

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