Wanxiang's Fisker bid marks its shift towards electric car production

Want China Times, Staff Reporter 2014-02-16

Lu Guanqiu, second left, Nov. 24, 2013, in Beijing. (Photo/Xinhua)

Wanxiang Group, China's leading auto-parts maker, is poised to foray into the realm of electric cars, by first taking over Fisker and then working with Tesla, both US electric-car makers, according to Lu Guanqiu, founder of the group.

The result of the group's flirtations with Fisker have yet to become clear with no news after the Feb. 12 auction of the US company's assets by the bankruptcy court of Delaware State.

The two main bidders were Wanxiang and an energy firm owned by Hong Kong tycoon Richard Li Tzar Kai. Lu Guanqiu said he was confident of winning the bidding, and has said that his group enjoyed an advantageous position.

Before the bidding, Chinese-language 21st Century Business Herald cited an insider who said that the outcome of the contest is still uncertain, and that Fisker's assets have been overvalued.

With the Chinese government's policy apparently leaning towards pure electric cars, rather than hybrid models, Wanxiang expects to start turning out complete cars quickly, should it win out in the bid for Fisker. As a reflection of his eagerness, Lu Guangxi made a final offer of US$35.7 million, a whopping premium of 87.5% for Fisker.

The Fisker takeover will help Wanxiang ease the bottleneck for the further development of its auto-parts operation, which is facing multiple difficulties, including an inability to produce key components/parts, low added value for products, lack of key technologies, and the dearth of support from both municipal and central governments.

Lu decided to transform the operations of his group during the global financial tsunami in 2008, when its orders plunged by one third in two months. One key move is a foray into the electric car sector, for which Wanxiang inked an agreement with Ener1 in 2011 to set up an auto lithium battery venture.

The takeover of Fisker, if successful, will enable Wanxiang to enter the complete-car production sector, as the company already secured a complete-car manufacturing license from the Chinese government in Nov. 2013. Wanxiang has opted for the production of pure electric cars, in order to sidestep the formidable competition posed by Japanese firms in the sector of hybrid models. Previously, Wanxiang acquired A123, the sole battery supplier for Fisker's Karma electric car.