BEIJING - In a move insiders see as groundwork for new energy vehicles and batteries, the chairman and largest shareholder of automaker Geely has personally invested in the Australian lithium compound company Galaxy Resources.
Geely Chairman Li Shufu's wholly owned investment company Strong Target International has purchased A$30 million ($31.7 million) in Galaxy bonds, while Fengli Group Co, a steel company in Geely's home province of Zhejiang, subscribed to the remainder of the $69 million bond issuance.
According to the noted Chinese-language financial journal 21st Century Business Herald, Galaxy Executive Director Anthony Tse said the resource company's major clients are 13 Chinese enterprises that have a total annual demand for 12,000 tons of lithium, a metal crucial in the manufacturing of high-tech batteries.
The amount of lithium used in auto batteries globally is expected to reach 140,000 tons in 2015, six times the level of 2010, the publication said.
Many experts believe the bottleneck to acceptance and mass production of new energy vehicles is light and powerful enough lithium batteries.
It was not the first acquisition by Geely that could be part of a strategic development plan.
After the privately owned carmaker acquired Volvo for $1.8 billion in August last year, Li said that the deal was worthwhile because Volvo has invested deeply in developing new energy technologies.
He said new energy vehicles are the future and will be the major battlefield for competition among automakers.
Geely Vice-Chairman Zhao Fuquan said in an interview last year with 163.com that carmakers should now make strategic preparations to develop new energy technologies.
He added that a company should not solely rely on government incentives, but should have its own clear plans for developing new energy vehicles.
Geely showed its latest-generation electric cars at the 2011 Shanghai auto show in April.
Local media report that Galaxy is planning for a listing in Hong Kong this year to help fund development of lithium resources
But Galaxy Director Tse noted prospects for new energy vehicles are hard to predict at present.
Geely now has several new energy models including the IG solar-powered electric car, the EK-2 Panda and the GPEC plug-in hybrid car - but all are concept cars for exhibition.
The company sold 415,000 vehicles in 2010. It plans to sell 2 million cars in 2020.
(China Daily 06/20/2011 page18)