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China strengthens ties to Zap electric carmaker

Santa Rosa's electric vehicle retailer Zap has signed a memorandum of understanding with Chinese officials to promote electric cars on the streets of Shanghai.

The company separately announced that it has completed a $10 million down payment for a majority share in Chinese car maker Jonway Automotive. The payment is part of a $29 million purchase agreement first announced in July.

The two developments are part of Zap's efforts to become a manufacturer and retailer of electric vehicles in China, now the world's largest auto market.

The memorandum is "the first big deal of its kind," the result of growing ties between business and government leaders from the Bay Area and Shanghai regions, said Jim Wunderman, president and CEO of the Bay Area Council, a business advocacy group. It was fostered in part by a state delegation that Gov. Arnold Schwarzenegger and the Council led to China in September.

The deal, Wunderman said, signals that both Zap and local Chinese officials understand that neither party can by itself build the charging and battery-swap stations needed to make electric vehicles a practical means of transportation in Yangpu, a district of Shanghai.

"Whether you're building electric vehicles in the Bay Area or China, it's going to require a public/private partnership to get it done," Wunderman said.

For the nine months ending Sept. 30, Zap reported a net loss of $7.3 million, compared to $7.5 million a year earlier. The company has posted one profitable year in its 16-year history.

The memorandum, signed last week in San Francisco by Yangpu party secretary Chen Yin, does not give Zap the right to exclusive sales, said Zap Board Chairwoman Priscilla Lu. But in a country where relationships are key, she said, "this signing of the agreement shows his commitment and trust of the company."

Production of Zap/Jonway electric vehicles is scheduled to begin in China in the second quarter of 2011, she said.


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