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We'll level with you on this one. We all know that Zap has seemingly had some, ahem... interesting business practices in the past. And we're not really sure what to make of this latest news, either. With that in mind, here's the main point: Zap has merged (or bought, depending on your viewpoint) with China's Jonway Automobile. There are three more bullet points to consider...

One: Zap has had seven straight annual losses, last making a profit in 2002. Two: Zap is reportedly paying over $29 million in cash that was apparently privately financed through unknown European sources along with 31.5 million shares in Zap... which were newly issues specifically for this transaction. Three: The Chinese authorities have yet to approve of the deal.

With all that out of the way, assuming all goes according to plan, Zap says it wants to offer an electric version of Jonway's A380 SUV for use as a taxi in China. It will reportedly cost around $25,000 and have seating for five. No word on range.

Jonway apparently operates 500 dealerships in China and just completed a new plant with 3.6 million square feet of space. A few months back, Zap and Jonway announced plans to have the three-wheeled Alias built in China. So... those are the facts, at least as best we can figure. See the press release after the break.

[Source: Bloomberg]

PRESS RELEASE

ZAP Acquires Majority Stake in China's Jonway Auto


New Company Combines EV Expertise with Mass Auto Manufacturing in China

ZAP and Jonway Group today announced they have signed definitive agreements according to which ZAP will acquire 51 percent 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 July 2, 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 March 30, 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 percent of Jonway Automobile following completion of the first phase and following final regulatory approval.

The ZAP Jonway merger accelerates 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. 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," said Steve Schneider, CEO of ZAP Jonway. "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."

According to Dr. Priscilla Lu, ZAP Board Chair: "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."

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 modern, 3.6 million square foot plant in Sanmen on approximately 141 acres of land. Focused on quality, 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," said Alex Wang, CEO of Jonway Automobile. "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."

Earlier this year, ZAP integrated electric drive systems into several Jonway vehicles through its joint venture ZAP Hangzhou. 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, which is now one of the remaining 15 finalists in the Progressive Insurance Automotive X PRIZE competition. 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 percent electric power train.

Dr Priscilla Lu added, "The new ZAP Jonway combined company enhances the complementary strengths of each, and uniquely positions the company in the EV market. Jonway Automobile has quality mass production manufacturing as well as access to the Chinese automobile market. ZAP can now apply its in-depth experience in EV technologies and engineering integration know-how to produce a new line of EV models for Jonway Automobile and provide access to worldwide international distribution channels. Jonway, with physical asset value assessed at around US$60 million in land, buildings and modern manufacturing facilities, is cash flow positive, debt-free, has growing revenues, and offers shareholder value for ZAP. ZAP Jonway has now become a significant automotive manufacturer/distributor worldwide"
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    • 1 Second Ago
  • 34 Comments
      • 4 Years Ago
      alex wang the ceo is amazing

      they are making up to 1,000 vehicles a month

      has anyone from auto blog ever really visited zap in either china or ca?

      jonway is a new real powerhouse in the autoworld

      zap is one of the real pioneers
        • 4 Years Ago
        Let me guess - you work for Zap?

        Zap shills are sooo easy to spot nowdays! They are all over the X prize website and blogs.
      • 4 Years Ago
      I see that there are multiple ways to see this merge but, by the looks there is a serious potential for success if all the directrices are efficiently followed through.

      -Technology:____ checked__ (Improved Batteries, reliable prototypes "Xebra", "Zapino", etc.)
      -Production Capacity:__checked_ (strategic merge with long term large scale auto producer partner Jonway Automobile who had over $20M in revenue returns).
      -Distribution Channels:__checked__ (US dealers, "over 50", and Chinese dealers, "500 and counting", already awaiting more prototypes to market them, beside of Egypt, Korea and European dealers.)
      -Target Market:__checked__(each Zap model is addressed to a very specific type of consumer from private to institutional, from off road bikes to city sedans).
      -Charge Control:__checked__ (This Year acquired patent from Battelle Memorial Institute for Smart Charger Controller Technology beside of other 20 for different types of vehicles.)
      -Expansion Possibilities: __checked__(Alliance with power players such as Holley Group which gives them a possible advantage when designing further vehicles for a new market, putting customers at a much ease situation when locating charging points).

      Give me some time to extend my research now...


      Cheers.



      Personaly I do have some faith on this.
      • 4 Years Ago
      zap is demonstrating its new electric taxi at the world fair in shanghai and qualified as the lead sponsor for the us pavilion earning the opportunity of shuttling important officials,ambassadors and organizers to and from the world expo.
      • 4 Years Ago
      Never mind the BUZZ i'm just waiting to get my hands on a ALIAS...hope it's out soon.
      • 4 Years Ago
      This news is probably excellent for those that own Zap stock. For anyone else in the US, it's DREADFUL.

      Here in Portland, there a shocking number of Zap Xebras. Well meaning greenies here were all over them, shelling out up to $12k for them at the peak of high gas prices. A year later, the dealership failed, and the remaining units were selling for less than half that.

      And today? They are actually WORTH nothing, and are a tough sell at any price. This includes those that have been given significant upgrades, which brings them up to the level of "less horrible". What do you call a Zap Xebra with a flat tire? Totaled.

      The Alias, unfortunate looking as it is, actually shows some promise and has done well enough in The X Prize to be a finalist. But $35k for a two seat, Chinese built, enclosed trike sold through Zap dealership?

      No way in hell.
        • 4 Years Ago
        ORLY? I've yet to see a zap out here. But i don't hang out in the city enough.

        IMHO those were junk to begin with... lead acid batteries = worthless.
        Didn't even think about the whole tire thing..
        Poor first adopters ;)

        BTW, do you attend the OEVA meetings here in Portland? I do, here and there.
      • 4 Years Ago
      Considerng china's point of view: terrible, unbreathable city air (smog), world wide market potential, new industrial potential, new car development, and charger development for world market, partnering with new technology in ev, possibly the best, and easy entrance to U.S. market on the consumer and institutinal level seems like a good deal for both parties.

      Thinking of an Alias.
      • 4 Years Ago
      we can say here that many other electric car companies like

      ZAAP and UQM look to be a much better deal
      • 4 Years Ago
      Reducing carbon footprint is at core discussion in China based on their current economic position, this leaves them needing a strong strategy to tackIe the issue. The long experience and curriculum that ZAP presents is a main confidence buster for any serious planner and results seaker, I am sure with ZAP's technological leadership and Jonway's production capability we might see China as the next world example of Green Transportation at Affordable Price, just now ZAP already offers the Xebra at retail price for less than 11,700 USD.
      • 4 Years Ago
      Zap Inc., known for a range of inexpensive, urban-oriented all-electric cars and trucks, announces today a $60 million merger with Jonway Automobile Co. Ltd., a subsidiary of China's Jonway Group. The combined company, to be known as Zap Jonway, will be 51 percent-owned by Zap. Its vehicles will be manufactured, along with Jonway's lines of bikes and cars, at Jonway's new, 3.6 million-square-foot plant located in China's eastern coastal province of Zhejiang.

      • 4 Years Ago
      ZAP & Jonway HD live Video look at this.

      http://61.153.192.130:3456/
      http://61.153.192.130:3457/
        • 4 Years Ago
        Now boys and girls, how many Zap shills did you count?
      • 4 Years Ago
      China got millions for a factory they would have shutdown soon anyways. Remember they are consolidating (closing) smaller automakers. They get assembly jobs, and tech transfer that cost 10s of millions and years to develop, so that they could copy it and replicate it in 2 years, putting Zap out of business.

      USA lost jobs, money, and technology age.
      Who is ahead again in your opinion?



      Read more: http://www.sfgate.com/cgi-bin/article/comments/view?f=/c/a/2010/07/07/BUC81EAOTE.DTL#ixzz0tR1TVHsg
        • 4 Years Ago
        That is wrong. the new zap electric suv is a technical bearkthrough, the result of remarkably smart engineering and innovate design.
        • 4 Years Ago
        More Zap shills! Or maybe they are just the same person with a hundred different aliases.

        Sockpuppets.
        • 4 Years Ago
        zap hang zhou is a joint venture with holley group, the world's largest volume producer of electric power meters.
      • 4 Years Ago
      to Middle Way-

      If you're in the burbs it is TOTALLY different. Portland at it's core is CRAWLING with bikes, and our system of bike routes, bike lanes, and bike "boxes" keeps bike and traditional traffic either separate or harmonius. Do you use any of the Willamette bridges? That's where you see the HUGE concentration of bikes and NEV's. The Inner East Side where I live and work is green central, and that is Xebra country. Granted, the vast majority of them are parked, ie- stationary and not moving under their own power.

      If you live and work in a world of grass lawns, office parks, strip malls. and attached two and three car garages, you could be in ANY suburb ANYwhere my friend.

      And while OVEA is a great group, they are a little too specific for my personal tastes. If one is looking for a holistic green scene and experience, hang in a sustainable neighborhood and support green businesses. I realize it sounds corny and trite, but one can experience such great value in almost any green business, and meet admirable, smart people just like you.

      Peace!
      Just William
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