ZAP Buying Chinese Carmaker Jonway Automobile to Produce Electric Taxicabs
ZAP, a developer of battery-powered vehicles that has posted seven straight annual losses, said it will buy a majority stake in Chinese automaker Zhejiang Jonway Automobile Co. in a deal worth about $43 million.
ZAP said it will pay $29.03 million in cash and 31.5 million shares for a 51 percent stake in Jonway Auto. The companies will partner to make battery-powered sport-utility vehicles for China’s taxi industry, and ZAP will distribute the SUV in other countries, ZAP Chief Executive Officer Steve Schneider said in an interview.
“While everyone else in the industry targets the Chinese passenger-car market, there’s less competition in the taxi industry,” he said. “I think we can take the leadership role.”
The A380 SUV will have room for five passengers and will cost $25,000, Schneider said. Jonway already produces a gasoline-powered version.
ZAP has posted one annual profit, in 2002, in the Santa Rosa, California-based company’s 15-year history. Its shares rose 4 cents, or 8.9 percent, to 49 cents at 3:59 p.m. in over- the-counter trading. The shares had reached almost 58 cents earlier in the day, the highest in 20 months. ZAP shares have almost tripled from a low of 17 cents on Dec. 14.
Chairman Priscilla Lu, who is working with the Chinese government to get approval to sell the cars, arranged financing for the cash portion of the transaction through European private investments, Schneider said without elaborating.
Lu has worked with Chinese regulators and other industries in the past, Schneider said. ZAP’s board approved the deal July 2, and the company expects the Chinese government to sign off by September, he said.
ZAP said in an e-mailed statement that it aims to buy the rest of Jonway Auto, a subsidiary of the Jonway Group, eventually. ZAP, which has a market capitalization of $54.6 million, is issuing new shares for the transaction, Schneider said.