December 13, 2010 / 8:55 AM / in 7 years

UPDATE 1-Hybrid Kinetic to make green auto parts in China

* Plans to start production of parts in 2012-2013

* Initial parts capacity to supply 500,000 vehicles per year

* Shares down 10.6 pct after surging 32 pct on Friday

By Alison Leung

HONG KONG, Dec 13 (Reuters) - Hybrid Kinetic Group Ltd (1188.HK), controlled by exiled Chinese tycoon Yang Rong, plans to produce low-cost clean-technology auto parts in China, allowing local car makers to sell green vehicles at conventional car prices, its chief executive officer said on Monday.

The plan to sell auto parts marks a shift from Yang’s original plan to make 3 million clean-energy vehicles per year in China. Yang fled the China in 2002 and now lives in the United States after being accused of economic crimes.

Chuantao Wang, a engineer based in California, said the company had identified a site for production of five key parts -- batteries, motors, engines, compressors and transmissions -- for green vehicles in Shandong province from 2012/2013.

The project’s initial capacity would provide enough of the five components to make 500,000 vehicles a year. The five components would have a combined estimated selling price of about 80,000 yuan ($12,000).

“The company will fund the project from internal resources, and we will have some investors and industry partners,” Wang told reporters in Hong Kong. He declined to give financial terms for the project.

The move follows the Chinese government’s rollout of subsidies of up to 60,000 yuan for the first 50,000 electric or hybrid vehicles sold by each auto maker in China.

“It makes no sense for us to produce millions of green vehicles when only 50,000 will receive subsidies,” Wang said.

China, the world’s largest auto market, had 160 auto makers, of which 120 were small local manufacturers, some of which had expressed interest in buying the parts, he added.

China has said it will launch a pilot programme to provide subsidies for hybrid and electric car purchases, but a statement from the Ministry of Finance did not mention a limit of 50,000 units per automaker. [ID:nSGE651009]


    Shares of Hybrid Kinetic ended down 10.6 percent on Monday after jumping 32 percent on Friday morning, prior to a brief trading suspension.

    The company said it was not aware of any reason for the stock movement on Friday and had recently signed an option agreement with the Netherlands Organisation for Applied Scientific Research, TNO, to make and sell electric variable transmissions for light-duty passenger vehicles under certain intellectual property rights owned by TNO.

    Wang said the company may use the TNO technology in the second phase of its parts project and its cooperation with Anhui Jianghuai Automobile Co Ltd (600418.SS) would proceed as scheduled.

    Jianghuai plans to invest about 30 billion yuan ($4.4 billion) in the production of clean-technology vehicles through a partnership with Hybrid Kinetic to make 1 million cars in the next eight years. [ID:nTOE678096]

    Hybrid Kinetic Chairman Yang, told Reuters in an interview in 2009 that he was planning three multi-billion-dollar U.S. plants to make 3 million clean-technology vehicles per year by 2017, and was seeking investors for a 60 billion yuan project in China to make 6 million clean-tech engines. Under the plan, half of the engines would be exported to the United States and half would be used in its planned auto production in China.

    Yang, who is also called Yeung Yung and is the former chairman of Brilliance China Automotive Holdings Ltd (1114.HK), Bayerische Motoren Werke AG’s (BMWG.DE) partner in China, was at one time China’s most influential car maker and richest man. He helped transform Brilliance from a stagnant state-owned auto factory into the country’s top maker of mini-vans. (Editing by Chris Lewis)

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