Kansas City, MO-based Smith Electric Vehicles, a global producer of all-electric medium-duty commercial vehicles, has secured a $42 million commitment from Sinopoly Battery Limited, an international-scale developer and producer of Lithium-ion batteries and related EV products based in China.
The $42M investment will position Sinopoly as a strategic shareholder in Smith Electric.
The first $2 million in funding closed yesterday, said Smith Electric, with the remainder to be “invested in two tranches pending milestones to be achieved by both companies in the coming months.”
Smith Electric also announced that production will resume at its Kansas City in mid-summer 2014. According to the company, it temporarily suspended production in Q4 of 2013 to transition its supply chain to Tier 1 suppliers. Smith Electric said doing so will enable it to produce vehicles at a lower cost.
Under the agreement, Sinopoly will become Smith Electric’s exclusive supplier for batteries in vehicle applications that are compatible with Smith Electric’s platforms and customer requirements. Sinopoly will also become a preferred supplier for certain electric-vehicle components that can be manufactured in its Hangzhou facility.
“Demand for all-electric commercial vehicles is rapidly increasing in China, and Sinopoly’s investment in Smith Electric highlights the important role we will play in the global marketplace,” said Bryan Hansel, CEO of Smith Electric.
“This investment provides both companies with the opportunity to leverage the synergies between our operations,” he added, “while Smith maintains the financial and operational flexibility to scale manufacturing, transition and strengthen our supply chain, and move toward company profitability.”
“Smith is an internationally renowned supplier of EVs,” said Cao Zhong, chairman and executive director of Sinopoly Battery. “Sinopoly’s investment in Smith represents an important and strategic advance step in establishing Sinopoly as a significant integrated player in the EV industry.
“The combined expertise of Smith and Sinopoly, which will adopt the name of FDG Electric Vehicles Limited shortly, along with the macro-subsidy policy for alternative energy vehicles, uniquely positions us to capitalize on the rapidly growing commercial EV market in China and the U.S,” he continued.
Charles Gassenheimer, chairman of the board of Smith Electric, pointed out that the Sinopoly investment “marks an important milestone in recapitalizing and restructuring the company in preparation for the public market.
“This agreement underscores Sinopoly’s institutional understanding of the global electric vehicle industry and the company’s commitment to working with Smith Electric to create a major player in the market,” he noted.
Smith Electric builds the Smith Newton, a 14,000 to 26,500-lb GVWR chassis-cab that is sold in the U.S. and other countries in various applications, including parcel, food, beverage and equipment delivery as well as student and personnel transport. It also produces the 7,700 to 10,100-lb GVWR Smith Edison, which is sold outside the U.S. as a chassis cab, panel van or minibus,
The company also said it “provides a full end-to-end approach to fleet transformation, comprising Smith Drive (a fully integrated EV drive and control system); Smith Power (a networked battery & power management system) and Smith Link (networked performance data).