Santa Rosa's electric vehicle retailer Zap has agreed to acquire 51 percent of a Chinese car manufacturer for $29 million, the company announced Thursday.
Zap signed a merger agreement with Zhejiang Jonway Automobile Co. Ltd., a wholly owned subsidiary of Jonway Group. The boards of the two companies signed the agreement July 2.
The combined company will be called Zap Jonway.
Zap's board chairwoman characterized the agreement as a chance to provide her company with needed manufacturing ability and access to China's market at a time when that country is pushing to reduce its carbon emissions.
"We all know that Zap has been lacking in manufacturing and sales," said Priscilla Lu, who became chair of the board almost a year ago. About that time Cathaya Funds, of which Lu is a general partner, agreed to invest up to $25 million in the 16-year-old company.
"I'm the first to tell people it will change," Lu said. Such change involves "focusing on revenue and deliveries of real products," she said. The agreement with Zap Jonway will provide "all of the capabilities and the knowhow to make that happen."
Lu, who has a doctorate in electrical engineering and computer science, said China has agreed to cut carbon emissions by 2020. The government there has agreed to give subsidies worth more than $17,000 for each electric vehicle sold there for use as a taxi. Zap Jonway hopes to sell such vehicles.
Zap's strengths — innovation and design — will provide key ingredients, she said.
Lu said she already has begun discussions with those who may be willing to provide the necessary capital for ZAP to pay for a majority interest in Jonway. "I will line up the necessary investors," she said.
Zap reported a net loss of nearly $10.7 million in 2009, following a loss of $9.8 million in 2008. First quarter losses this year were $3.2 million, compared to $2 million for the year before.