ZAP Acquires 51% Stake in China’s Jonway Auto in Focus On China EV Market; Plans Acquisition of Other 49% in Second Phase
|ZAP Jonway plans to introduce an electric A280—the “little brother”to the A380 being used as an electric taxi. Click to enlarge.
ZAP and Jonway Group announced they had earlier signed definitive agreements according to which ZAP will acquire 51% of Zhejiang Jonway Automobile Co. Ltd. as part of a strategy to capitalize on the growing automotive and electric vehicle (EV) market in China. ZAP is a 15-year-old California EV company and Jonway Auto is a wholly owned subsidiary of Jonway Group, a 20-year-old Chinese vehicle manufacturer.
According to the terms of the definitive agreements, ZAP will acquire 51% of Jonway Auto for US$29.03 million in cash. The boards of directors for ZAP and Jonway Auto approved and signed the merger agreement on 2 July 2010.
Jonway Auto reported annual revenues of approximately US$40 million in 2009 and approximately US$20 million for the first quarter of 2010. According to the terms of the transaction, Jonway Auto will be debt-free upon the closing of the transaction.
According to the terms of the definitive agreements, ZAP has the right to acquire the remaining 49% of Jonway Auto at the same valuation by 30 March 2011 or at a then current valuation after that date. ZAP and Jonway intend this transaction to be phase one of a two-phase acquisition, whereby the two companies will combine their complementary expertise, leveraging ZAP’s EV technology and Jonway Auto’s quality ISO 9000 certified mass production capabilities to address the new alternative energy vehicle market.
ZAP intends to acquire the remaining 49% of Jonway Automobile following completion of the first phase and following final regulatory approval.
The ZAP Jonway merger will accelerate cost-effective manufacturing of ZAP’s electric vehicles and gives ZAP access to the Chinese market through Jonway’s distribution channels of more than 80 factory direct dealerships that feed into hundreds of factory authorized dealers, ZAP said. Jonway’s volume manufacturing capacity gives ZAP a strong manufacturing base with the means of commercializing its innovative EV technologies.
By combining ZAP’s experienced team of EV engineers with Jonway’s manufacturing capabilities, the combined ZAP Jonway will be able to scale up with the fast-growing worldwide market for affordable electric and fuel-efficient vehicles. The new entity will leverage ZAP’s extensive intellectual property and international market access with Jonway’s current China distribution channels and revenue base, for enhanced shareholder value. The new company creates an integrated worldwide sales and manufacturing operation.—Steve Schneider, CEO of ZAP Jonway
As originally planned when I joined ZAP in connection with the Cathaya Funds’ investment in the company, the Jonway transaction was formulated to give ZAP the complementary facilities and automotive manufacturing expertise to position itself as a worldwide EV and automobile manufacturer. Jonway’s management continues to lead and expand its product line of traditional vehicles and will begin to build the production line for ZAP’s EVs in the coming quarters. ZAP will enhance its operations management team to focus on delivering the opportunities at hand.—Dr. Priscilla Lu, ZAP Board Chair
Jonway Automobile, with approximately 800 employees, is currently manufacturing approximately 1,000 vehicles per month and has a capacity to produce up to 30,000 vehicles per year at its 3.6 million square foot plant in Sanmen on approximately 141 acres of land.
Jonway is ISO 9000 and China Compulsory Certification (CCC) certified. Jonway distributes through a nationwide network of auto dealerships in China and distribution partners in Europe and Egypt. Jonway’s 3-door SUV has been CE approved in Italy by its European partner for the European market.
ZAP’s engineering enables us to expand into the EV market and position our company to be one of the leaders in China’s EV market. The ZAP team also brings us international market access and automotive distribution channels for the new models that we are designing, and ZAP will help us meet the required international standards for these new markets.—Alex Wang, CEO of Jonway Automobile
Earlier this year, ZAP integrated electric drive systems into several Jonway vehicles through its joint venture ZAP Hangzhou. (Earlier post.) These vehicles are now being showcased and used as electric taxis at the Shanghai Expo. Jonway has also agreed to produce the ZAP Alias electric car. ZAP is also one of the five companies selected by the United States Postal Service to engineer and retrofit a gas powered delivery van with a 100% electric power train. (Earlier post.)