Geely Automobile and Lifan Technology established a joint venture to upgrade their car manufacturing business

Text/Forbes China

Image source: Visual China

On the evening of December 13, Lifan Technology (601777. SH) announced that it intends to set up a joint venture with Geely Automobile in the directly administered area of Liangjiang New Area in Chongqing. The registered capital of the target company is 600 million yuan, of which the company contributes 300 million yuan in the form of monetary funds, with a shareholding ratio of 50%, and Geely Automobile invests 300 million yuan in the form of monetary funds, with a shareholding ratio of 50%. According to the "Investment Cooperation Agreement" signed by the two parties, Geely Automobile will fully support the management and operation of the target company's car-making business, and jointly promote the transformation and upgrading of Lifan Technology's automobile industry with Lifan Technology.

In terms of specific business, Geely Automobile will fully support the management and operation of the target company's car-making business, and jointly promote the transformation and upgrading of Lifan Technology's automobile industry with Lifan Technology, relying on Geely Automobile's systematic advantages and professional capabilities in the whole process of car-making, through fine management and industrial empowerment, integrate, improve and upgrade Lifan Technology's automobile R&D system, supply chain management, technology platform, sales channels and systematic full-manufacturing management program to achieve win-win development. Simultaneously build a quality ecology of the whole value chain, ensure the quality of all aspects of research and development, manufacturing, supply chain, after-sales service, etc., implement the concept of "zero defects", and at the same time join forces with Lifan Technology to explore a new path for the transformation and upgrading of Lifan Technology's new energy manufacturing industry and high-quality development.

In 2020, Lifan Technology implemented restructuring. On November 6, 2020, the restructuring manager of Lifan Technology and The Geely Metroplane and Geely Metrojet and Geely Metrojet Parent Company, Geely Metrojet, jointly signed the Investment Agreement to clarify the identity of the reorganization investor and determine that the Manjiang Red Fund was jointly initiated by Geely Metrojet and Liangjiang Fund, and that Geely Metrojet, Geely Technology, or Geely Metrojet/Geely Technology held an absolute holding company with a shareholding ratio of more than 70% (hereinafter referred to as "Industrial Investors") as the main body participating in the implementation of the company's restructuring investment.

In fact, judging from the sales data disclosed by Lifan Technology, the effect of the reorganization has begun to appear. On the evening of December 9, Lifan Technology announced the November production and sales express report, producing 1,510 new energy vehicles in the same month, an increase of 941.38% year-on-year; and selling 1,140 new energy vehicles, an increase of 917.86% year-on-year. From January to November, it produced 2,636 new energy vehicles, an increase of 162.55% year-on-year, and sold 1,970 new energy vehicles, an increase of 107.37% year-on-year.

It is understood that the establishment of the joint venture company will coordinate travel companies and power exchange service companies, match models, and work together to build a power exchange network ecology and promote the development of urban power exchange standardization. The target company will continue to develop and upgrade its vehicles to meet market demand and create more value for listed companies.

According to Geely Automobile (00175. HK) announced on the Hong Kong Stock Exchange that the establishment of the joint venture company can continue to promote the upward development of the Geely brand, and form a complete coverage of different levels of the mainstream market through the combined layout of each brand.