Daimler and Chinese partner Beijing Automotive Group (BAIC) have signed a letter of intent in Stuttgart which will further deepen the comprehensive strategic alliance between the two.

Both sides will evaluate additional initiatives at corporate level as well as support each other with further investments. BAIC and Daimler will jointly analyse the possibilities of technological cooperation and the development of new energy vehicles.

The letter was signed by BAIC chairman Xu Heyi and president Han Yonggui, Mercedes’s R&D chief Thomas Weber and Daimler Northeast Asia chairman and CEO Ulrich Walker.

BAIC sold 1.5m units last year and has a long term strategic partnership with Daimler including significant investments in the Chinese automotive industry.

The new letter of intent builds on a strategic framework agreement signed earlier this year.

In June both partners agreed to invest EUR2bn (US$2.7bn) in the Beijing Benz Automotive (BBAC) joint venture which is currently producing Mercedes-Benz C-Class and E-Class sedans and will be expanded to include the GLK compact SUV as of 2011 as well as three versions of the new generation of Mercedes premium compact cars.

As of 2013, a new engine plant will produce I4 petrol engines which will be used in locally produced Mercedes passenger cars and vans.

A new R&D centre at BBAC will be established to focus mainly on vehicle testing and adaptation as well as R&D activities with suppliers.