Zap making big move into China

Nov.29

Jonway purchase would bring access to enormous Zheijang production plant

SANTA ROSA – Zap’s electric vehicles will most likely go into high-volume production in China.

The company’s pending 51 percent stake in Jonway Automobiles in the Zheijang Province of China will bring major changes to the 50-employee Santa Rosa pioneer of Zero Air Pollution vehicles, which got its start in Sonoma County in the 1970s.

Zap Jonway, as the new company will be called when the deal is finalized, will manufacture and sell both gasoline and electric vehicles.

“Incentives in China are very aggressive,” said Priscilla Lu of Cathaya Capital, one of Zap’s largest investors and member of its board of directors. “China wants to be the world leader in electric vehicles.”

“The government subsidizes electric vehicles at about $9,000, and large cities like Beijing and Shanghai add another $9,000. That’s over three quarters of the cost, and the subsidies go to the manufacturer, not the car buyer,” she said.

Utilizing efficiencies of scale, manufacturing electric vehicles alongside gasoline vehicles will enable Zap Jonway to offer the most competitive prices in the market, she said.

A new co-CEO, Alex Wang, is expected to expand the market from China to the rest of the world, according to a release from Zap.

Jonway already sells an electric SUV, manufactured in its ISO 9000-certified, 3.6 million-square-foot plant in the city of Sanmen. The plant will be expanded and enhanced to manufacture Zap vehicles.

“The plant is the size of the Nummi plant in full production,” said Zap CEO Steven Schneider. “Owning 51 percent of an operation like that means that our future plans can be implemented very quickly, using only a fraction of the plant’s capacity.”

The company has partnerships in Korea and soon will announce other Asian partners, Mr. Schneider said.

“The Asian market is very, very interested in electric vehicles.”

Zap will still do assembly work on vehicles it produces for the U.S. government. It’s a finalist for contracts to refit U.S. Postal Service trucks, although just how many in the 120,000 fleet will be awarded to Zap is not known, he said.

Zap got its start manufacturing electric scooters during the 1970s. The company has grown its product line to include sedans, roadsters, vans, trucks and recreational vehicles. Zap stock is traded over the counter under ZAAP.

Zap’s activities in China – which include a deal with Shanghai officials to provide charging stations, battery swap facilities and maintenance depots for the commercial district and a pilot program to add Zap vehicles to the district’s bus, government and taxi fleets – caused quite a buzz at the recent Bay Area Council meeting.

Council president Jim Wunderman called it “a major milestone for the Bay Area’s electric vehicle industry.”