German automaker Daimler has entered into a equity collar agreement with Tesla Motors, a US-based manufacturer of electric vehicles and electric vehicle powertrain components.
As per the agreed terms, Daimler, which already has 4% in Tesla, will continue to own its securities for over the next three years.
According to the company, the transaction is expected to protect the value of Daimler's shareholding in Tesla, whilst allowing Daimler to retain significant participation in any further appreciation of Tesla share price.
Daimler finance and controlling board of management member Bodo Uebber said that Tesla's innovation, which is helping to drive the rising demand for electric vehicles, proves that the company has made the right decision by acquiring a stake in Tesla at an early stage, and that it is cooperating with the right partner.
"We are protecting our investment in Tesla against share price fluctuations," added Uebber.
In addition, Tesla develops the complete drivetrain for the Mercedes-Benz B-Class Electric Drive, which is expected to be launched in 2014.
