Business Finance

Mercedes to Increase Its Stake in Aston Martin

By Adriana Anastasiades Thursday, October 29, 2020

Mercedes-Benz plans to lift its stake in Aston Martin as part of a deal that will provide the British automaker with broader access to Mercedes’s technology. The deal will reinforce the current collaboration between the two car manufacturers and will allow Aston Martin to use electric and hybrid powertrains from Mercedes, something that is essential for the company’s expansion strategy.

A Game-Changing Agreement

Under the agreement, Mercedes Benz will obtain a larger stake in Aston Martin — up to 20% — which will make it one of the largest stakeholders in the British carmaker. Before, Mercedes owned about 2.3% of Aston Martin stock under a deal, which involved the German automaker supplying its customized V8 engine to Aston Martin.

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

The luxury car brand did not provide any specifics regarding the upcoming products that were included under the new deal, but the company’s Chief Executive, Tobias Moers, said that the first products that will use technology from Mercedes are scheduled to launch next year.

Moers added that implementing the new technology in its cars will take a while but pointed out there would be "a kind of product firework in 2023."

With the help of the new technology, Aston Martin said it expects to sell about 10,000 vehicles on an annual basis by 2025 and believes it will manage to generate revenues of approximately £2 billion ($2.6 billion) as well as EBITDA profits of about £500 million ($649.3 million). The British carmaker sold 5,862 vehicles last year.

Canadian billionaire Lawrence Stroll, who bought a major stake in Aston Martin this year, said the carmaker will hit the 10,000 sales target through front- and mid-engined sports vehicles as well as a set of SUV cars. The carmaker will generate around 20-30% of its sales by 2024 through hybrid vehicles, and the company doesn’t intend to roll out a fully electric vehicle before 2025.

“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,” said Lawrence Stroll.

“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.”

Aston Martin plans to keep using its own platforms and technology in certain areas, in spite of its agreement with Mercedes that allows it to utilize its powertrains and tech. Stroll emphasized that Aston Martin plans to keep manufacturing its own cars at its Gaydon and St. Athan factories.

The deal is also hugely significant for Aston Martin’s plans to produce its own electric vehicles (EVs) as it will provide it with access to reliable electric vehicle technology.

Another Major Boost for Stroll & Co.

After the 4-time Formula 1 world champion Sebastian Vettel ended his collaboration with Ferrari and signed for the Aston Martin F1 team, he also confirmed that he holds a stake in the company.

Vettel revealed this before the Eifel Grand Prix on the 11th of October but didn’t provide any specifics.

“If you are asking me if I have shares in the company, I have. How much? I think it’s a secondary thing and I won’t talk about,” Vettel said.

“But I believe in the project and I’m excited to see what happens.”

Vettel’s decision to invest in Aston Martin comes at a very convenient time, given that shares in the whole industry declined due to the coronavirus pandemic.

Stroll said Vettel represents a key factor in Aston Martin’s planned marketing drive in years to come as the carmaker works to bounce back from its recent slump. Shares of the carmaker declined this year but have recovered some ground recently.

Vettel has signed a multi-year deal with Racing Point, a Formula 1 team, which is due to be rebranded to Aston Martin for the next F1 season, as his collaboration with Ferrari draws to a close. The German driver will be replacing Sergio Perez, who said he will leave Racing Point at the end of the 2020 season.

“I am pleased to finally share this exciting news about my future. I’m extremely proud to say that I will become an Aston Martin driver in 2021,” Vettel stated prior to the Tuscan Grand Prix in Italy.

“It’s a new adventure for me with a truly legendary car company. I have been impressed with the results the team has achieved this year and I believe the future looks even brighter,” Vettel said.

Summary

Mercedes Benz has entered into a new agreement with Aston Martin, which will allow it to raise its stake in the British carmaker, while Aston Martin will gain access to Mercedes’s technology in return.

Moreover, former F1 world champion Sebastian Vettel said he acquired shares in Aston Martin, just a few weeks after he signed to race for Aston Martin’s F1 team in the next season.

About the Author


Headshot for author Adriana Anastasiades

Adriana is a Journalist with a passion for reporting on business leadership, with a diverse interest in multiple industries.

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