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Aston Martin Sells Its Soul To Survive But Will It?

Aston Martin will be getting a lot of help from Mercedes-Benz. Among the list of help is access to Mercedes next-generation hybrid and electric powertrains. In exchange, Mercedes gets 20% of Aston Martin. So Aston Martin sells its soul to survive with future models Mercedes on the inside. Will it still be Aston Martin with it being based on Mercedes?

Mercedes now becomes Aston Martin’s biggest owner at 20%

The side view of a red 2021 Aston Martin DBX as it descends a rocky trail
2021 Aston Martin DBX | Aston Martin

Mercedes now becomes Aston Martin’s biggest owner at 20%. Not only that but its new CEO Tobias Moers just replaced former CEO Andy Palmer in August. He said that Mercedes acquiring its 2% stake in 2013 “was just to open the door.” He did not say what their 20% does for Mercedes. 

“Now we have access to the whole powertrain lineup of AMG, for example, from the low end to the high end,” Moers told Motor Illustrated. “We can use their technology to transform it a little bit more bespoke for our cars in the future.” But how can An Aston Martin vehicle be all Mercedes on the inside and still be an Aston Martin?

With this move, Mercedes’ economies of scale go beyond what was expected

Orange 2020 Aston Martin DBS Superleggera Volante with the top town in front of the beach
2020 Aston Martin DBS Superleggera Volante | Aston Martin

RELATED: Aston Martin Gets Another Billionaire Boost

Mercedes now is able to go beyond its own available models for economies of scale beyond what was expected. Aston Martin can now shift to EV development without having to spend from its limited available capital. With this move, Permian Investment Partners now becomes a large shareholder in Aston Martin. “The opportunity draws numerous parallels to our early 2016 investment in Ferrari,” Permian said in a statement. “We believe that Aston’s improved balance sheet and expanded strategic partnership will propel best-in-class execution from this new and highly reputable team and ultimately lead this renowned luxury brand to maximize shareholder value over the coming years.”

All of this assumes that Aston Martin can sell at least close to 10,000 vehicles a year. It has been less than two years since Aston Martin went public. That was supposed to have given Aston Martin the shot in the arm it needed. But poor sales and high inventories have not allowed it to succeed in going public. 

Aston Martin says the 500 million pounds of development monies satisfies long-term capital needs

Aston Martin V12 Speedster
Aston Martin V12 Speedster | Aston Martin

Now Aston Martin says that the 500 million pounds of development monies it has will satisfy its long-term capital needs. At least that is what Aston Martin’s Chief Financial Officer Ken Gregory said in a conference call to investors. Aston Martin, meanwhile, has just begun delivering its DBX crossover to reserved buyers and dealers. 

Besides the cash infusion in going public Canadian billionaire Lawrence Stroll sunk $316 million into Aston Martin at the beginning of this year. That, also, was supposed to carry Aston Martin on wings of money. As for Mercedes, it sounds happy to have found more buyers for its EV platforms. Don’t forget the original stake in Aston Martin allowed it to stab AMG engines into its cars. 

In any event, Aston Martin is struggling to stay afloat. Wherever it can get money helps it limp along. But at some point, if it finds it is in continual need of more capital it might not be able to find any more angels. After all, there are only so many investors willing to take on a company constantly bleeding red ink.