Sources: Mercedes-Benz to invest in Chinese autonomous-driving developer

SHANGHAI: Mercedes-Benz Group AG is preparing to invest in Chongqing Qianli Technology Co, a Shanghai-listed developer of autonomous-driving systems, to bolster its software capabilities in China, according to people familiar with the matter.

The German automaker plans to buy a minority stake in Qianli, said the people, who asked not to be identified discussing private information.

The company had a market capitalisation of around 59.5 billion yuan (RM35.21bil) as of Wednesday.

The two sides may announce a deal as soon as this week, the people said.

One of Qianli's main backers is Zhejiang Geely Holding Group Co, which has spearheaded efforts to bring Mercedes on board, the people said.

Geely has folded its autonomous-driving assets into Qianli, positioning the firm as the group's main platform for future smart-driving technologies, they said.

Mercedes declined to comment. Qianli and Geely didn't respond to requests for comment.

The investment highlights the tightening ties between Geely and Mercedes, which are also in talks over possible cooperation on combustion-engine projects, the people said.

Discussions on that front are at an early stage, they said.

German automakers are revamping their China strategies - deepening local partnerships and rolling out models tailored to customers there - to keep pace with fast-growing domestic manufacturers led by BYD Co and Xiaomi Corp.

Demand for their luxury EVs has been muted amid fierce competition that's depressed prices of mass-market models.

With Mercedes becoming a shareholder, Qianli is expected to work with the German automaker on research and development projects and supply technology for its upcoming models in China, the people said.