Friday, October 25, 2013

Wanxiang poised to enter auto manufacturing

Barring opposition, Lu Guanqiu, chairman of one of China's leading auto parts makers, will finally achieve his longstanding dream of extending his business to making cars.
On Oct. 22, the Ministry of Industry and Information Technology (MIIT) publicized a list of new auto manufacturing enterprises, which include Wanxiang EV, an electric car subsidiary of Wanxiang Group.
Unless the ministry receives an objection between Oct. 22-28, Wanxiang will be granted an auto manufacturing license, something Lu has wanted to do for over 10 years.
Wanxiang is set to receive a license to produce passenger cars and trucks. Wanxiang EV is the conglomerate's producer of electric vehicles, which are being used in public transportation in some cities, reported Shanghai's First Financial Daily, citing government officials in charge.
An industry insider downplayed the significance of Wanxiang's certification, saying the ministry has relaxed conditions for application, although conditions for manufacturing passenger cars remain strict.
"Unlike foreign auto parts firms, which avoid making complete cars for fear of crossing their manufacturing clients, Chinese auto parts firms and even some auto dealers own auto manufacturing complexes, as exemplified by Wanxiang's project which has been underway for over 10 years," an auto-industry analyst at a securities firm noted.
"If I cannot make autos, my son will do so," Lu Guanqiu commented. In line with government policy, Lu is specializing in new energy cars for his project.
Wanxiang kicked off its electric car development in June 1999, which covers batteries, automated machinery and electric cars. In 2002, Wanxiang successfully developed its own lithium ion battery and controller device before unveiling its electric sedan and electric bus subsequently. The electric bus can be seen in Hangzhou's West Lake area on demonstration. Since 2008, four electric car models, including an electric service car and electric engineering car, have passed national test and obtained licenses.
A milestone was made in April 2009, when Wanxiang announced an investment of 1.37 billion yuan (US$224 million) to set up the country's largest electric car and lithium battery production base.
To accelerate gains in technology, Wanxiang then carried out a litany of overseas cooperation projects and acquisitions, including a joint venture with Ener1, a US battery firm, on a battery and battery cell production base in Hangzhou. The initial investment was US$300 million. It also acquired A123, the largest new energy battery manufacturer in the US for US$256.6 million in January 2002.