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5. Zhongshan Broad-ocean Motor Co., Ltd. Business Report FY ended Dec. 2016

Zhongshan Broad-ocean Motor Co., Ltd. Business Report FY ended Dec. 2016

New Company

-On July 27, 2017, Zhongshan Broad-ocean Motor Co., Ltd. signed a contract with Zhongtong Bus Holding Co., Ltd. and the Management Committee of Liaocheng Economic Development Zone regarding the establishment of a new joint company, Tongyang Fuel Cell Technology (Shandong) Co., Ltd. The new joint company will be built in the Liaocheng Economic Development Zone. The total investment is Chinese yuan (CNY) 500 million, owned 88% or CNY 440 million by Zhongshan Broad-ocean Motor, 10% or CNY 50 million by Zhongtong Bus Holding, and 2% or CNY 10 million by an investment company named by the Management Committee of Liaocheng Economic Development Zone. It produces and develops hydrogen fuel cell system and hydrogen fuel power train, and offers new energy vehicle management platform. When established, it's expected to generate sales of CNY 10 billion a year. There will be two construction phases, and the first phase will cost CNY 1 billion. (From a corporate announcement on July 27, 2017)

-On August 17, 2016, Zhongshan Broad-ocean Motor Co., Ltd. and the Wuhan Linkonggang Economic and Technological Development Zone signed an agreement on a new energy vehicle industrial park project. In accordance with the agreement, Zhongshan Broad-ocean Motor will establish a new subsidiary in the development zone to focus on new energy vehicle business. The new company will work on commercializing hydrogen energy technology, establishing new energy vehicle infrastructure, producing new energy vehicle powertrains, and developing and producing servomotors. The company will also establish an application research center for new energy vehicles and powertrains. The total investment in this project is expected to reach CNY 3.8 billion. (From an announcement by the company on August 19, 2016)

Acquiring Canada Battery Supplier Ballard Power

-Zhongshan Broad-ocean Motor Co., Ltd. announced that Zhongshan Broad-ocean Motor (Hong Kong) signed a contract on July 26, 2016 to acquire a 9.9% stake in Canada-based Ballard Power Systems Inc. The Hong Kong subsidiary agreed to purchase new shares that will be issued by Ballard Power for USD 28.3 million. Ballard Power was established in 1979. It started developing fuel cells in 1983, and currently focuses on designing, development, and production of proton exchange membrane (PEM) fuel cell batteries including fuel cells, fuel cell modules, and battery systems. (From news releases issued by multiple sources on July 28, 2016)

-On September 1, 2016, Zhongshan Broad-ocean Motor Co., Ltd., the Canada-based Ballard Power Systems, Inc., and Shanghai Zhongsu Energy Technology Co., Ltd. signed a memorandum of understanding on the transferring of Ballard's fuel cell module technology for commercial vehicles. Zhongshan Broad-ocean Motor is the largest shareholder and a strategic partner of Ballard Power Systems. Ballard Power will provide Zhongshan Broad-ocean Motor with technology to produce, assemble, and sell fuel cell modules for commercial vehicles and to offer related services. Zhongshan Broad-ocean Motor will form a fuel-cell module production joint-venture, which will operate in Wuhan, Beijing, Shandong Province, and Chongqing (or Sichuan Province). Shanghai Zhongsu Energy Technology offers designs and services related to fuel cell modules for commercial vehicle application to the new joint venture. (From an announcement by the company on September 2, 2016)

-On February 17, 2017, Zhongshan Broad-ocean Motor Co., Ltd. signed a framework licensing agreement on fuel cell module technology with a Canadian fuel cell battery technology supplier, Ballard Power Systems, Inc. Zhongshan Broad-ocean Motor intends to set up, directly or indirectly, a subsidiary, build an assembly line for licensed battery modules in Zhongshan and expand the business in licensed areas. Ballard Power Systems is going to support Zhongshan Broad-ocean Motor and its subsidiaries technically to ensure their assembly lines operate at full capacity. It also allows Zhongshan Broad-ocean Motor to use all intellectual properties of Ballard Power Systems regarding assembly, sales, and service on battery modules for commercial vehicles. (From a corporate announcement on February 17, 2017)

Awards

-In 2016, Prestolite received the Platinum-class Excellent Supplier Award from Caterpillar, and the Global Strategic Cooperation Supplier from Cummins. (From the 2016 annual report)

-In 2016, Generator received A-class Supplier Award from Chery and JAC. (From the 2016 annual report)

Business Plan for 2017 and 2024

-In 2017, the company is expected to achieve sales of 8.17 billion and net profit of 0.65 billion. (From the 2016 annual report)

-By 2024, the company is expected to achieve sales of CNY 18 billion, in which HM Department, RE Department and EV Department each will achieve CNY 6 billion. (From the 2016 annual report)

R&D Facility

-The company set up R&D teams in Zhongshan, Beijing, America, Wuhu, Shanghai, Wuhan, and Shenzhen, specializing in the research of powertrain systems, intelligent efficient motors, and automotive rotating equipment for NEVs.

-Beijing Prestolite was authorized as one of the enterprise technology centers by the Beijing Municipal government.

-Shanghai Edrive, as president of the National Industry Technology Innovation Strategic Alliance of Electric Drive System of Vehicle, and the supporting institution of Shanghai Automobile Electric Drive Engineering Technology Research Center, successively untertook and participated in more than 30 Ministry of Science and Technology's 863 EV Major Projects, and managed more than 10 national and professional standards.

-The company has two national-level laboratories, namely EV National Engineering Laboratory——Broad-ocean Motor E-drive Laboratory, and National Joint Engineering Laboratory. The company has been authenticated as China Torch Program High-tech Enterprise and Guangdong Provincial-level Enterprise Technology Center.

Patents

-As of Dec. 31, 2016, the companies had applied for 1,737 patents, including 1,222 authorized patents and 1,173 valid patents.

R&D Cooperation

-In Oct. 2009, the company signed agreements with Beiqi Foton Motor Co., Ltd., Beijing Institute of Technology, and Beijing Jiaotong University, aiming to collaborate in the field of drive and control systems for NEVs.