Two electric vehicle joint venture agreements between U.S. automaker Ford Motor and mainland-based Zotye have been delayed for the past three or four years, with both sides awaiting official approval from the Communist Party of China, and Ford recently announced the termination of the agreements. This comes as Zotye’s performance has hit rock bottom and its electric vehicle subsidiary was filed for bankruptcy liquidation as early as last year.
Ford announced on Feb. 4 that it was terminating its plan to set up an electric vehicle joint venture with Zotye, and that it would offer Zotye the cancellation of the agreement in writing.
Ford had signed agreements with Zotye in 2017 and 2018, planning to establish a joint venture for a pure electric vehicle manufacturer and an intelligent mobility business company.
For the reason of terminating the cooperation, Ford said that both agreements between Ford and Zotye could not be continued due to significant changes in the pure electric vehicle industry and related policies in China in recent years.
It is reported that the above two cooperation plans between Ford and Zotye have not really been carried out. when investors asked about the progress of these two joint venture projects in March 2019, Zotye executives responded that “the cooperation project with Ford is waiting for the approval of the Development and Reform Commission”.
After Ford announced the termination of the cooperation, Zotye’s shares opened lower in early trading on Feb. 4 and then fell, from a once-high of 18 yuan (RMB, same below) to close at 1.94 yuan on Feb. 4, with market value dropping from 37 billion yuan to less than 4 billion yuan.
A few years ago, the Chinese Communist Party officially supported the electric vehicle (new energy vehicle) industry, including the implementation of large-scale subsidies. But after 2013, the CCP began to cool down each year. In April 2020, the subsidy standards for 2020 to 2022 were slashed by 10%, 20% and 30% respectively from the previous year; and on December 31 of the same year, it said that the subsidy standards for new energy vehicles in 2021 would be further reduced by 20% from 2020.
Zotye was founded in 2005, and on December 2, 2020, Zotye announced that its wholly owned subsidiary, Zotye New Energy, was filed for bankruptcy and liquidation on the grounds that it could not settle its claims as they fell due and its assets were insufficient to settle all its debts.
According to Zotye’s financial report, the net loss for the first three quarters of 2020 was 1.563 billion yuan; total liabilities at the end of the third quarter were 14.2 billion yuan. 2019 loss of 11.2 billion yuan.
Lou Guohai, director of Zotye Auto, has said that he cannot guarantee the truthfulness, accuracy and completeness of the content of the company’s annual report because there are large uncertainties about the company’s ability to continue operating and the company is facing numerous litigation and guarantee matters, etc.
In addition, although Zotye was once a popular car, at the Time of its most profitable and frequent awards, it was revealed that several models of cars were copycats, such as the Zotye SR7 imitating the Audi Q3, the Zotye SR9 imitating the Porsche Macan, and the Zotye Concept S imitating the Lamborghini Urus.
Just days before Ford ended its partnership with Zotye, Ford announced a six-year agreement with Google to install Google Apps on the screens of all Ford models outside the mainland starting in 2023.
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