Only two to three manufacturers will survive in the auto industry moving forward, said one source who is familiar with the way Li thinks.
Geely chief Li Shufu said on Saturday that he was "particularly pleased to accompany Daimler on its way to becoming the world's leading electro-mobility provider". But Friday is the first time Li's stake has crossed the threshold of 3 percent of stock, requiring a public notification.
The Chinese group bought Volvo Cars from Ford in 2010, and has since transformed the fortunes of the Swedish carmaker. He is now one of the wealthiest people in China, with a net worth estmated by Bloomberg at $13.8 billion.
Last year, Geely Holding bought a 51% stake in Lotus, the British sports auto maker.
"A Geely stake in Daimler would underscore their push for cooperation that'll help them get more expertise, like electric cars", said Frank Biller, a Stuttgart-based analyst with Landesbank Baden-Wuerttemberg.
China's avid search for footholds in Europe has raised hackles among some politicians in Berlin, Paris and Brussels.
Daimler sold 2.3 million Mercedes-Benz cars worldwide a year ago, about a quarter of them in China.
Its move to buy more Daimler poses a big challenge for the Germany-based auto maker since Mercedes-Benz already holds an industrial alliance for developing vehicles with Renault-Nissan, which is owner of 3.1% of Daimler, and announced plans to build new electric vehicles with existing joint venture partner in China BAIC Motor Corporation.
The Chinese automaker is the owner of Sweden's Volvo Cars and Lotus Cars of the United Kingdom, and in December reached a roughly $3.3 billion agreement making it the largest shareholder in Swedish truck maker AB Volvo.
The Stuttgart firm is unusual among its German peers in lacking a single controlling shareholder, whereas Volkswagen is dominated by the Porsche-Piech clan and BMW by the Quandt-Klatten family.
Photo A Mercedes-Benz assembly line operated by Daimler in Sindelfingen, Germany.