(May 4, 2015, Hong Kong) FDG Electric Vehicles Limited (“FDG Electric Vehicles”, “FDG”, “Company” together with its subsidiaries, the “Group”; stock code: 00729.HK) is pleased to announce that the Group will partner with Smith Electric Vehicles Crop. (“SMITH”), a world renowned electric vehicles manufacturer, to establish a joint venture (the “JV”) in the US. Both parties have also entered into Intellectual Property (“IP”) and technology licensing agreements with the JV, taking full advantage of the combination of the Group’s electric vehicles designs and SMITH’s technologies and distribution network, so as to accelerate the development of the Group’s brand name and products in the US market.
The Group will contribute the US exclusive right to use its self-designed passenger van, mini bus, panel van and cab/chassis (at a USD30 million consideration) into the JV and also subscribe to the JV’s shares with USD15 million in cash; while SMITH will inject all of its US exclusive IP pertaining to electric vehicles and its current client base (at a USD40 million consideration). In addition, the JV will enter into an exclusive sourcing agreement for electric vehicles’ SKD (semi knocked down) kits and electric vehicle battery with the Group, and the exclusive agreement of assembly and production with SMITH respectively to entrust SMITH to manufacture electric vehicles using the Group’s SKD kits and batteries.
In the second phase, SMITH will proportionally distribute all JV shares acquired from the agreement to its shareholders (accounting for 47.06% of JV’s shares). In addition, the JV will raise USD20 million from the market. After all transactions completed, the Group will become the JV’s largest single shareholder (holding approximately 45.45% of JV’s issued share capital).
JV’s shares structure after all transactions*
In accordance with the forecast of electric vehicles’ SKD kits sourcing agreement, the demand of electric vehicles SKD kits from the JV will be 3,000, 5,000 and 10,000 units in 2016, 2017 and 2018 respectively; such demand will reinforce the Group’s sales revenue of electric vehicles’ SKD kits and battery. SMITH is the leading manufacturer of zero-emission all-electric medium-duty commercial vehicles in the US with well-developed distribution network and after-sale services. Its clients include Pepsi Cola/ Frito Lay, FedEx, Coca Cola, etc. Having accumulated rich experience and data, SMITH also has developed proprietary technologies covering battery management systems, automobile driving and control system, vehicle drive and control system as well as vehicle intra-networking. However, in order to expand its business scale, SMITH will need the support of an experienced, stable and cost-effective commercial electric vehicle supply platform for its US market, such as the original electric vehicle designs and production capacity of FDG.
Upon completion of the transactions, JV will become an electric vehicle agent which encompasses sound model design of electric vehicles, high-quality battery and electric vehicles’ SKD kits, advanced electric vehicle software technology and world-renown customer base. All electric vehicles sold to the relevant famous clients by JV in the future, will adopt the vehicle models designed by FDG as well as the electric vehicles’ SKD kits and power batteries produced by FDG. The Group’s electric vehicle products will be widely used by world-renown brands in the US market, which not only enhance FDG’s brand awareness, but also prove the quality of FDG’s electric vehicle products met the international high level standard.
Establishing the joint venture not only improve FDG’s design techniques and R&D ability in electric vehicle , but also enhance its competiveness of electric vehicle business and improve cost effectiveness, safety degree and quality of its products by taking advantage of SMITH’s current distribution network and software technology. The joint venture will strengthen the cooperation between FDG and SMITH’s technical team, so as to achieve greater synergy for the Group’s
development in the future.
Mr. Cao Zhong, Chairman and CEO of FDG Electric Vehicles Limited stated, “Through the collaboration with SMITH via establishing a joint venture will promote the Group’s electric vehicle products, including vehicle design, power battery and electric vehicle SKD kits, into the US market, which will be adopted by the fleet of world-renowned blue chip clients. This will accelerate the establishment of the Group’s brand name and products into the US and international markets. In addition, since JV’s light-assets business model is leveraging on the existing assets of the Group and SMITH, it will involve less capital commitment from its shareholders and potentially be in a better position to expand its international operation and capture the increasing demand in the electric vehicle market.”
“The reason for this transaction is that we believe the time is now for market acceptance of commercial electric vehicles. We are seeing all of the indications that the market that we helped establish has now turned the corner from the R&D phase to the commercial phase. In establishing this JV, we believe this will accelerate our new technology platform development. The new company leverages FDG’s ground-up commercial all-electric vehicle designs and its electric vehicle manufacturing facility, which can produce up to 100,000 vehicle per annum, as well as Smith’s 12M+ miles of commercial vehicle experience to offer a complete fleet electrification solution,” commented Bryan Hansel, Chief Executive Officer of SMITH.
For further details of each agreement, please refer to the Company’s announcement issued on HKEx on May 4, 2015
FDG Electric Vehicles Limited
Listed on the Main Board of HKEx (stock code: 00729), FDG Electric Vehicles Limited (“FDG”) is a vertically integrated electric vehicle manufacturer engaged in electric vehicle, lithium-ion battery and electric vehicle leasing business. The Group engages in independent R&D, design and production of electric vehicles such as coaches, medium and minibuses, commercial vehicles, SUVs and other models, and in the R&D, production and sale of lithium-ion batteries as well as the provision of leasing service of electric vehicles.
For further information about products and business of FDG, please visit the Group’s website at http://www.fdgev.com