Luxun Precision plans to enter into a joint venture with Chery New Energy to engage in the research and development and manufacturing of new energy vehicles

On the evening of February 11, Lixun Precision issued an announcement that on the same day, Lixun Precision signed the Strategic Cooperation Framework Agreement (hereinafter referred to as the "Agreement") with Chery Holding Group Co., Ltd. (hereinafter referred to as "Chery Holdings"), Chery Automobile Co., Ltd. (hereinafter referred to as "Chery Shares"), Chery New Energy ("Chery Holdings", "Chery Shares", "Chery New Energy" and its affiliates collectively referred to as "Chery Group") in Wuhu to establish a strategic partnership for both parties.

Luxun Precision's announcement on the signing of the strategic cooperation framework agreement; image source: screenshot of the announcement

The announcement also pointed out that on the basis of the "Agreement", Lixun Precision and Chery New Energy intend to jointly establish a joint venture company, specializing in the research and development and manufacturing of new energy vehicles, providing cutting-edge R&D design, mass production platform and sea exit for Lixun Precision's core auto parts business, and is committed to achieving the company's medium- and long-term goal of becoming a leading manufacturer of auto parts Tier 1.

According to the announcement, on the day of the signing of the Agreement, the Company's controlling shareholder, Lixun Co., Ltd. (hereinafter referred to as "Lixun Limited"),and Qingdao Wudaokou New Energy Automobile Industry Fund Enterprise (Limited Partnership) (hereinafter referred to as "Qingdao Wudaokou") signed the Equity Transfer Framework Agreement, which stipulated that Lixun Limited would purchase 19.88% of the equity of Chery Holdings, 7.87% of the equity of Chery Shares and 6.24% of the equity of Chery New Energy held by Qingdao Wudaokou for 10.054 billion yuan. Lixun Limited does not control Chery Holdings, Chery Shares and Chery New Energy. Before the signing of the Equity Transfer Framework Agreement, Qingdao Wudaokou held 46.77% of the equity of Chery Holdings, which was the largest shareholder of Chery Holdings.

It should be known that as a leading domestic precision manufacturing company, Luxshare Precision has built a complete platform through endogenous and epitaxial methods in recent years, and its business spans the three major fields of consumer electronics, communications and automobiles. Among them, the automotive business segment roughly includes automotive wiring harnesses, automotive electrical appliances and connectors and structural parts, and its 2021 semi-annual report revealed that in the first half of 2021, luxeshare precision revenue accounted for about 4% of the company's total revenue. The joint venture with Chery New Energy will undoubtedly promote the accelerated expansion of Lixun Precision in the automotive industry.