These plans, which have not been disclosed before, will position Momenta as the first Chinese supplier selected by Mercedes to serve as a primary provider of a crucial technology and selling point for its vehicles. This decision comes as fierce competition and rapid technological advancements in China compel Western automakers to reevaluate their supply chain approaches.
Since 2017, the German luxury car manufacturer has held an investment in Momenta, but the two entities have yet to publicly unveil any collaboratively developed products.
Over the years, Momenta has established itself as a leading provider of advanced driver assistance systems (ADAS) in China, offering features akin to Tesla's full self-driving capabilities, which can manage urban traffic with human oversight.
Mercedes plans to inject an additional $75 million into Momenta and may consider further investments as a cornerstone investor in the company's initial public offering, anticipated in the first quarter of 2025, according to the sources.
The automaker has selected Momenta as its ADAS supplier for four models set to launch in China between 2025 and 2027 and is internally deliberating the potential use of Momenta's software in additional Chinese models beyond 2027, as noted by one of the sources.
Mercedes is collaborating with Momenta to explore initial plans for integrating the Chinese supplier's technology into its models outside of China, according to two sources.
Both Mercedes and Momenta have chosen not to provide comments on this matter.
Additionally, Mercedes has been investigating advanced driver-assistance systems (ADAS) in partnership with U.S. AI chip manufacturer Nvidia, a collaboration that was announced in 2020. This partnership aims to develop Mercedes-Benz vehicles equipped with upgradable automated driving capabilities, although no products have been launched to date.
CHALLENGES IN CHINA
Mercedes is striving to catch up in the Chinese market regarding electric vehicles and smart-driving technology, where competitors like Tesla, Nio, and Xiaomi currently lead.
This year, only 3% of the 443,764 vehicles sold by Mercedes in China were electric, as reported by the China Association of Automobile Manufacturers, which is significantly lower than Nio's sales figures.
The competition among automakers in China for autonomous driving technology is intensifying, with BYD recruiting thousands of engineers to enhance its in-house software development. Companies like Nio, Xpeng, and Xiaomi are also creating their own ADAS chips to improve smart-driving capabilities in their electric vehicles.
This competitive landscape has enabled Chinese ADAS suppliers such as Momenta, Huawei, and DeepRoute.ai to rapidly gain automaker clients and integrate their systems into various vehicle models.
Momenta's clientele includes BYD, SAIC, and Audi in China. The largest investor in Momenta is SAIC, with additional support from General Motors and Toyota.