Zongshen PEM Power Systems launching an electric motorcycle for China and Asia

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Zongshen PEM Power Systems launching an electric motorcycle for China and Asia

Zongshen PEM Power Systems Inc. Announces Launch of Electric Motorcycle in China

Just read the press release (below) ... from what I understand this isn't quite like the low end scooters/motorcycles we've been seeing imported from China. Zongshen is the largest motorcycle maker in China, as I understand it.

One interesting angle to this is Mission Motors. Last winter there was news of a proposed joint venture between Zongshen and Mission where Mission was to provide some drive train technology that Zongshen would use to build motorcycles for the Asian market. As it says in the press release below, many cities in China are banning gasoline motors due to pollution concerns. That means electric vehicles have to step in to take their place, right? That's how Zongshen sees it obviously. However they don't say in the press release whether this is the result of their discussions with Mission Motors.

Zongshen, Warren Buffett, Mission Motors and BYD

Electric supermotorcycle maker Mission Motors pondering a deal with Chinese motorcycle company

More insights on the odd-couple pairing of Mission Motors and Zongshen

VANCOUVER, Sept. 16 /CNW/ - Zongshen PEM Power Systems Inc. ("ZPP" or the "Company") (TSX:ZPP), today announced that it has launched its new "Toronto" line of electric motorcycles at the inaugural Zongshen PEM International Electric Motorcycle Business Alliance Conference held in the conference centre at the Chongqing headquarters of the Zongshen Industrial Group. The Toronto line was designed to compete on performance and price with 110 cc to 120 cc gas motorcycles in China. Prior to the launch of the Toronto line the Company produced a line of smaller electric bicycles and scooters widely sold in China, which have lower top speed, range and power.

Over 200 dealers from Hubei, Henan, Shandong, Yunan, Hebei and other provinces attended the conference resulting in the first orders for the Toronto line. ZPP plans to focus on establishing distribution in China market in 2010 and then to expand marketing to South East Asia in 2011.

"The successful launch of the Toronto line marks the official release of the first genuine electric motorcycle in China," said Zongshen Zuo, Chairman and CEO of ZPP, "The launch of the Toronto line is the initial stage of the transition of our gas motorcycle lines into electric vehicles. After the acquisition of the gas motorcycle business in July 2010, ZPP is well positioned to fully leverage the high volume supply chain, production facilities and technologies for gas motorcycles to produce a full line of electric motorcycles. In addition, since the Toronto line is comparable to 110 cc to 120 cc gas motorcycles, it is a better fit for our gas motorcycle distribution network that includes some 7,000 domestic dealers than our e-bike and e-scooter products. While there is still a very large and growing market in China and globally for our gas motorcycles, ZPP intends to be a leader in the long term world trend towards environmentally friendly, no emission electric vehicles."

The market for 110 cc to 120 cc gas motorcycles in China is estimated to be about 8,000,000 units per year. The Toronto line will be priced to compete in this segment, providing customers with similar performance at less than one tenth of the annual operating cost. In addition, many cities in China have banned the issuance of new gas motorcycle licences, so the Toronto line will offer customers an electric product with more power, speed and range than the e-bikes currently available in China. Since ZPP is the first company to launch an electric motorcycle product in China, it believes it can earn better margins than those in the very competitive, low margin China market for e-bikes and scooters.

The Company has registered seven design patents for its new electric motorcycle line and is using a unique power system to deliver better performance than the electric products now widely sold in China. The initial Toronto line uses lead acid batteries to keep the price in line with comparable 110 cc to 120 cc gas motorcycles sold in China and South East Asia. International manufacturers and consumers in North America, Europe and Japan tend to use and demand lithium batteries that improve performance, but also drastically increase price. Accordingly, ZPP believes that it is a unique product for the China and South East Asia market, that can be upgraded to a lithium battery for western markets.

Following the closing of the acquisition of the Motorcycle Business on July 2, 2010, the Company has become one of the major two-wheeled motorcycle manufacturers in China with over 3,000 employees and expanded product offerings of up to 500cc gas motorcycles. In the year ended December 31, 2009 the Motorcycle Business had revenue of over RMB 1.8 billion ($276 million) and net profit of approximately RMB 110 million ($17 million). ZPP plans to leverage the manufacturing infrastructure, technology, brand and distribution of its profitable and growing gas motorcycle business to develop a full line of electric motorcycles as the initial step to being a leader in the China and global market for low emission vehicles.

About Zongshen PEM Power Systems Inc.

Zongshen PEM Power Systems Inc. is a public company trading under the symbol ZPP on the Toronto Stock Exchange. The Company manufactures gas motorcycles, electric motorcycles, electric bicycles and other e-vehicles in China for the Chinese domestic and international markets. Zongshen PEM Power System's largest shareholder is Zongshen Industrial Group, one of China's largest manufacturers and distributors of engines and power equipment.

Forward Looking Information

This release contains forward-looking statements, which may be identified by statements containing the words "will", "anticipate", "expect", "intend" and other similar expressions. These statements are based on certain factors and assumptions including foreign exchange rates, expected growth and sales, results of operations, performance, and business prospects and opportunities and effective income tax rates. While the company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: our relationship with Zongshen Industrial Group; fluctuations in market demand for small gas motorbikes and e-bikes; changes in competitive pressures, including pricing pressures; timing and amount of capital expenditures; changes in financial and capital markets and corresponding effects on the company's investments; changes in currency and exchange rates; and the effects of government policy and regulations;. Additional risks and uncertainties can be found in our MD&A for the interim period ended June 30, 2010 and in our other filings with the Canadian securities commissions. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For further information: Frank Chen, Zongshen PEM Power Systems Inc., Chief Financial Officer, 1-604-687-7908, info [at] zongshenpem.com

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