ZAP and Jonway Auto have increased factory production capacity and running operations to seven days a week with a single shift to built 50 battery-electric minivans per day to meet backlog orders from Dong Feng Motor Corporation in China, the company announced Oct. 27.
Dong Feng is demanding delivery of at least 3,000 EV minivans by Dec. 31 and expects its orders to increase to no less than 2,000 per month in January. Jonway Auto is on target to produce 800 battery-electric minivans in October.
A second shift with additional factory equipment may be added to produce at least 2,000 vehicles per month. The target is to reach sales of no less than 20,000 of Jonway's battery-electric minivans in 2016 and aggregating to sales of 100,000 of ZAP and Jonway's EV minivans as projected by Dong Feng over the next three years.
The partnership with Dong Feng Motor facilitated by Shi Kong from Hangzhou enables Jonway Auto to offload the cost of lithium battery and the electric motor cost to Dong Feng and Shi Kong. This represents more than half of the cost of materials for the minivans. Even with this reduction in the top and bottom line by taking out the lithium battery and motor costs, the projected revenues of the 20,000 minivans would exceed $150 million if achieved, and with reasonable margins to achieve profitability in 2016, barring any supplier parts availability issues.
Due to the high demand for some of the critical supplier parts, ZAP and Jonway Auto are currently in discussions regarding potential partnerships with companies producing lithium batteries and EV motors. Such a partnership could help mitigate the risk of availability of parts and could provide a source of working capital for these high cost items, according to the company.