Gree Electric Appliances, China's largest air-conditioner maker, is entering the fast-growing electric vehicle market with a CNY13bn (US$2bn) acquisition of electric vehicle manufacturer Zhuhai Yinlong New Energy.
According to Bloomberg, the appliance maker, which announced its intention to buy Yinlong in March, is among the dozens of startups and industrial companies venturing into the field of electric vehicles after China designated new-energy vehicles a strategic industry as part of a broader push to upgrade its manufacturing sector. Electric vehicles also would curtail tailpipe emissions that contribute to worsening air pollution in major cities.
Gree is making the purchase in order to support the Chinese government's push to clean up the environment and promote greener technologies, Chairman Dong Mingzhu reportedly said in an interview in Beijing in March. "The decision was made with the premier's work report target to have blue skies, green pastures and clear water," she said, referring to Premier Li Keqiang's report to the legislature that listed the government's priorities for the year.
According to Bloomberg, Yinlong started manufacturing batteries for electric vehicles in 2009 and has a line of seven electric passenger cars and 18 electric buses. The company sold 3,189 electric buses as of January, giving it a market share of 3.6% in China, Yinlong said.
The report added Gree is entering a crowded electric vehicle market with tough competition from other well-funded investors. Over 200 Chinese companies are developing 4,000 models of new-energy vehicles and unveiling prototypes.
The appliance maker is diversifying into electric vehicles even as its sales slump.
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Gree receives about 86 percent of its revenue from manufacturing air conditioners and parts and sells two out of every five air-conditioners in China, Bloomberg added.