- Jianghuai Automobile plans to build up to 1 million new-energy vehicles a year in partnership with U.S.-based Hybrid Kinetic Motors.
- Initial investment will be no less than $295 million.
- The new joint venture is still subject to government approval.
HEFEI, China — Jianghuai Automobile Company said it will team up with U.S.-based startup Hybrid Kinetic Motors Corp. to invest $4.4 billion to develop eco-friendly new-energy vehicles and related components in China.
JAC and HKMC signed a framework agreement to form a 50-50 joint venture with an initial investment of no less than $295 million, the Chinese carmaker said in a statement submitted to the Shanghai Stock Exchange.
A new manufacturing base is expected to be set up in Hefei, capital of Anhui Province, with projected annual production capacity of 1 million new-energy vehicles, 1 million powertrain systems and 12-million-kilowatt-hour lithium batteries within eight years, JAC said in the statement.
The new joint venture is still subject to government approval, JAC noted.
If approved, the deal could vault JAC into the top ranks of Chinese automakers. The company has been transitioning to the passenger-car business and has introduced several hybrid models, including the Binyue Hybrid and Heyue Hybrid sedans, but it remains a middle-tier player in China's burgeoning auto market, still overshadowed by its provincial competitor, Chery Automobile.
"The cooperation provides JAC with a financing channel, advanced technologies and expertise for boosting its green-car business as it has failed to take the lead in the traditional combustion-engine sector," analyst Gao Li with Huachuang Securities said.
The tie-up has sparked a huge media buzz in China because it marks the potential return of the powerful but controversial auto executive Yang Rong.
HKMC was set up by Yang, also known as Benjamin Yeung and Yeung Yung, who was previously the founder of Brilliance China Automotive Holdings, BMW's Chinese partner. Yang fled to the U.S. in 2002 after being charged in China with economic crimes.
Inside Line says: Lingering questions about Yang's background in China may be the biggest challenge to the project. — Vivian Jin, Correspondent
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