BEIJING/HONG KONG -- Daimler plans to invest in Farasis Energy's planned $480 million initial public offering, aiming to ensure a stable supply of batteries from the Chinese company as it ramps up electric vehicle production, three people familiar with the matter said.
The plan has yet to be finalized and is subject to change, the people said, speaking on condition of anonymity as the discussions are private. The size of the potential investment was not immediately clear, they said.
The two companies struck a deal last year for Farasis to supply Daimler with lithium ion battery cells and Farasis is building a factory in Germany.
Daimler and Farasis declined to comment on the potential IPO investment.
Farasis gained approval last week to raise about 3.44 billion yuan in an IPO on China's Nasdaq-like Star board.
The sale, which is slated for the current quarter, could value the company at up to 30 billion yuan ($4.2 billion), sources have previously said.
Like many other global automakers under pressure to meet tougher emissions standards in Europe and China, Daimler plans to ramp up EV production. It currently procures batteries from China's CATL for the China-made version of the EQC electric car.
Automakers are eager to build deeper relationships with battery makers to manage supply, either by investing in the companies or signing long-term contracts.
Sources said in January that Volkswagen Group was looking at taking a 20 percent stake in Chinese battery maker Guoxuan High-tech Co.
Farasis, which is based in Ganzhou, in the eastern province of Jiangxi, will use the IPO proceeds for a lithium ion battery project and to replenish working capital, according to a preliminary prospectus.
The company, which has plants in Ganzhou and Zhenjiang, also counts China's BAIC BluePark New Energy Technology and Great Wall Motor as major customers.