ZAP going big with China venture - page 2 of 2

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So the Lotus-based ZAP-X will be built by Youngman?

Yes. Lotus was searching for a manufacturer in Asia that could produce product that was quality enough to put their name on it, and which they didn't think was actually possible. And then they came across Mr. Pang [Chairman of China Youngman], who partnered up with two German companies, Neoplan and Man. All the Neoplan buses in Germany and Austria and throughout the world are all built by Mr. Pang. And the same with the Man trucks and heavy equipment.

The German market especially, along with the European market, is very demanding of high quality. He was able to meet their standards, which opened the door to investigate it for Lotus.

Once they realized how committed he was to quality, we were able to put together a deal that really is a dream situation. Which is to get high quality electric vehicles in a price that is competitive for production.

Is Pang going to modify one of his factories, or build a new factory for this new line?

There's a factory almost completed in Jinan, which is a sister city to Sacramento. That's where the automobiles will be built. The tooling and the whole assembly line will be built specifically for electric vehicles.

Mr. Pang ranks No. 15 out of all manufacturers in China. He feels that in order to be No. 1, it's a very competitive world to just build another car, or a better gasoline vehicle. He believes in order to be No. 1 that you need do a world changing event. And technology will be the only way to get to that point.

That's the path he's chosen. He's a very wealthy man, so he's not motivated by the money, he's motivated by making a difference. And he's committing all of his resources to making that difference. And he has the support of the government all the way through.

In fact, Arnold Schwarzenegger himself is getting involved in the deal. His office has shown an unbelievable interest and have been calling consistently. And we're intending to do some economic development here in California for electric vehicles as a result of this transaction.

What sort of development would be happening in California?

There are quite a few countries that provide tremendous incentives for the manufacturing of any type of clean energy, especially in automobiles. So a lot of resources are being spent to develop many of the product lines in what's called a knock down kit.

For instance, in the Netherlands there's a tremendous amount of incentive if assembly would take place there. So China Youngman would build and manufacture everything, send it there ready for assembly, and then they would get government incentives to do assembly there.

A similar program is of interest to Gov. Schwarzenegger here in California.

Many of the countries are requesting this, so the design is to try to set it up for these knock down kits for delivery in several countries this way.

Did you spot any of your competitors out there trying to make deals?

I think all of my competitors are out there trying to make similar deals, but it's very difficult. It takes a long time, and getting the due diligence done in China on your own is very difficult.

We had the luxury of Lotus doing all of the due diligence for several years with China Youngman, because of Proton. And here's a guy that's written a check to Proton for $100 million in advance. You don't find entrepreneurs like that too often.

Do you have a plug-in distribution model?

Our philosophy is to make every vehicle have the capacity to plug into a standard household outlet. We are working on infrastructure in China. We're working on things that will look like a streetlamp.

At the top of the streetlamp is a fairly understated turbine type of windmill, combined with a solar cell over the light fixture. And then the casing of the streetlamp, which can be quite large, is a high-density lithium battery. Then at the base is a charging station.

If you picture streetlamps without the need for any type of underground or overhead wiring infrastructure to get the power there, you can get off-grid charging stations put in very easily.