SANTA ROSA, California – The Commerce Department of Zhejiang Province in China has approved U.S. electric vehicle maker ZAP’s proposed acquisition of a 51 percent equity interest in Zhejiang Jonway Automobile Co., Ltd. (Jonway), according to a ZAP press release on September 17.
ZAP and Jonway now intend to move forward to satisfy the remaining conditions to closing the transaction, including but not limited to those related to financing, foreign exchange authority approval in China and share registration, said the press release.
According to the terms of the definitive agreements, ZAP has the right to acquire the remaining 49 percent of Jonway at the same valuation by March 30, 2011 or at a then current valuation after that date.
ZAP and Jonway signed an agreement to produce electric SUVs, cars and other electric vehicles in China for Chinese domestic market and global distribution on January 21. According to the agreement, ZAP would perform research and development of the core technology in Santa Rosa, California and license the technology for this partnership. ZAP and Jonway will jointly market and sell electric vehicles in China, North America and Europe. ZAP said its China operations aim to capitalize on Chinese government subsidies for plug-in electric vehicles.
The 5-door Jonway A380 SUV (named UFO in China), which integrates ZAP’s AC propulsion and lithium battery system technologies, will be the first model jointly produced by the partnership, said ZAP.
Jonway currently manufactures several thousand units per month of its A380 compact SUV in 3- and 5-door models. The Taizhou-based automaker now has an annual production capacity of 50,000 vehicles and a sales network of 600 dealerships. It remains to be seen if ZAP’s acquisition will be approved by the central authorities as the acquisition of 51 percent of a local carmaker is against government regulations in both the 1994 and 2004 auto industry policy.