Zhejiang Geely Holding Group, the owner of Volvo and foreign partner of Proton, plans to take a major stake in Daimler, the maker of Mercedes-Benz. This was reported by Bild am Sonntag, the weekend edition of Germany’s Bild daily, citing sources. Geely could even become Daimler’s biggest shareholder, the report said.

Bild‘s sources said in November last year that Daimler turned down an offer from Geely to take a stake of up to 5% via a discounted share placement. The German carmaker however said that Geely was welcome to mop up shares in the open market. According to a report earlier this week, Geely had already done so, and its 5% stake purchase is expected to be announced soon.

If it’s 5%, Geely’s stake will be smaller than BlackRock’s 6% and the Kuwait Investment Authority’s 6.8%, but larger than the 3.1% held by the Renault-Nissan Alliance. The Gulf state’s sovereign fund is the current largest single shareholder in Daimler, which is 71.2% owned by institutional investors.

Insiders believe that this is all to do with electric vehicle technology, in view of China’s tough new quotas aimed at reducing pollution and lowering the country’s reliance on oil. Sources say that Geely wants to access Daimler’s EV battery technology and wants to start an EV joint venture in Wuhan.

Daimler has existing Chinese partners – ties include a venture with BYD, China’s leading EV maker, and state-owned BAIC. The latter has announced that it will stop the production and sales of vehicles with internal combustion engines by 2025, going full electric.