By San Francisco Business Times

ZAP Inc. is launching in the Chinese market.

The Santa Rosa electric vehicle maker has agreed to buy a 51 percent stake in Jonway Automobile Co., a subsidiary of the Chinese vehicle manufacturer Jonway Group, in the first phase of a complete acquisition of the company.

ZAP (OTC: ZAAP) will pay $29.03 million in cash for the stake.

ZAP will form a new company, Zap Jonway. Jonway's 3.6 million-square-foot factory has a capacity of 30,000 vehicles per year.

Directors of both companies signed the merger agreement on July 2.

The deal gives ZAP the right to acquire the remaining 49 percent of Zhejiang, China-based Jonway Automobile following completion of the deal and final regulatory approval.

ZAP, which makes electric cars, trucks and scooters, hopes to cash in on the growing automotive and electric vehicle market in China.

Jonway Auto reported revenue of approximately $40 million in 2009 and $20 million in the first quarter of 2010, Zap said in its announcement.

Copyright 2010 American City Business Journals
Copyright 2010