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With rising demand in electric vehicles, FDG Electric Vehicles broadens supply chain upstream to set up a new cathode materials factory. FDG is pleased to announce that FDG Kinetic, Guizhou Guian Asset Investment and ALEEES have entered into an agreement to establish a joint venture in Guizhou Guian New District to build a new production facility for cathode materials for lithium-ion batteries with a preliminary annual production target of 30,000 tonnes.
Xin Guobin, Vice Minister of Industry and Information Technology, announced in a recent speech in the 2017 International Forum on Chinese Automotive Industry Development that the Chinese Government is working with regulators on a timetable to end the production and sales of internal combustion engine vehicles. Industry experts believe that this is only a start to electrify the traditional automotive sector, implying that a new era of electric vehicles is emerging. The market has a robust demand for safe, high-quality electric vehicles. Cathode materials is an important ingredient for making power batteries while the quality of power batteries determine the performance of the electric vehicles. As a vertically-integrated pure electric vehicle original equipment manufacturer, FDG possesses the technical abilities to expand upstream in the battery and cathode materials segment, riding on this new wave of electrifying vehicles with FDG's core competence.
The ground-up, pure electric vehicles co-developed by FDG Group and its international brand Chanje are internationally recognised. The quality are of international standards and the vehicles are fully exportable. Since the first batch of electric vehicles has made its way to the United States in September, the initial feedback has been overwhelmingly positive. The global demand for electric vehicles has been surging which pushes upstream demand for batteries and cathode materials. The Group is confident that this project taps directly to the ever-increasing demand for batteries and cathode materials and expects to see a positive impact soon. The project enhances the Group's strategic development upstream along the supply chain. When the project is completed, it would provide a stable and good quality supply of cathode materials to the Group's electric vehicle segment. The Group to own a greater control on cost while enhancing product performance to be even more competitive in the market. In addition, with ALEEES' leading technical expertise in manufacturing cathode materials for lithium-ion batteries, this cooperation is deemed to become a new spotlight of the Group. FKL has recently been included as a constituent of the MSCI Hong Kong Small Cap Index in May, an indication that the Company's efforts are recognised. The signing of the cooperation instils a new source of energy to the next chapter of the Group's development.
This is a subsequent cooperation between FDG and Guizhou Guian New District since the last Electric Vehicle partnership. The Guian New District Committee has been actively creating a vertically-integrated supply chain in Guian for the long term. The Guian Committee has agreed to offer the joint venture a subsidy of not less than RMB120 million. Although the total investment for the project adds up to approximately RMB2.3 billion, FKL is only expected to invest only RMB127.5 million to make up the initial 51% share of the registered capital. The ongoing revenue stream will be reinvested into the project.
The support from the Guian Committee creates an ideal platform for the development for the electric vehicle industry. FDG will leverage on this platform to continually integrate the electric vehicle supply chain, fully utilising the industry cluster effect to bring Guian New District into a world-class electric vehicle manufacturing ecosystem. FDG continually expands its influence as a leader in the pure electric vehicle sector.
Recent policies in the electric vehicle segment has brought positive sentiments to the industry. Please see below for extracts from recent news articles.
Reported by Bloomberg:
China Fossil Fuel Deadline Shifts Focus to Electric Car Race
Xin Guobin, the vice minister of industry and information technology, said the government is working with other regulators on a timetable to end production and sales. The move will have a profound impact on the environment and growth of China's auto industry, Xin said at an auto forum in Tianjin on Saturday.
The world's second-biggest economy, which has vowed to cap its carbon emissions by 2030 and curb worsening air pollution, is the latest to join countries such as the U.K. and France seeking to phase out vehicles using gasoline and diesel. The looming ban on combustion-engine automobiles will goad both local and global automakers to focus on introducing more zero-emission electric cars to help clean up smog-choked major cities.
Reported by Reuters:
Foreign automakers will pay for Chinese EV drive
China gave the auto industry an electric shock by announcing ambitions to phase out the combustion engine in the world's largest car market. Details and deadlines are scant, but draft regulations accelerating the development of electric vehicles offer a glimpse of Beijing's strategy: foreign automakers will pay the price.
The plan puts global giants in a corner. A new quota system, slated for 2018, requires car companies to make new energy vehicles account for at least 8 percent of total domestic sales. That figure will rise to 12 percent by 2020. Those who miss targets must purchase credits from battery-powered rivals. If the foreign brands don't ramp up sales, buying credits from greener peers could be pricey. But because a separate subsidy scheme favours locally made cars, selling more EVs means setting up production in China - and sharing technology with Chinese JV partners, inadvertently fostering stronger rivals.
Either way, domestic brands are most likely to reap the benefits.
About FDG Electric Vehicles Limited
FDG Electric Vehicles Limited ("FDG", stock code: 00729.HK) is a vertically-integrated pure electric vehicle Original Equipment Manufacturer. FDG aims to become a globally recognised producer of greener, more economical and more energy-efficient pure electric vehicles. The Group's core businesses include researching, designing and developing pure electric vehicles from the ground up, producing lithium-ion batteries, manufacturing cathode materials for lithium-ion batteries, as well as other direct investments.
About FDG Kinetic Limited
FDG Kinetic Limited ("FKL", stock code: 00378.HK) adheres to a philosophy of "Green and Growth", gradually establishing and improving its lithium-ion batteries industry chain. The core business of the company includes researching, manufacturing and selling cathode materials for lithium-ion batteries and its related products. FKL also holds equity interests ALEEES and Sinopoly Battery, strategically positioning itself in the cathode materials and lithium-ion battery segment. FKL is a subsidiary of FDG Electric Vehicles.