Geely Automobile Holdings has contracted to sell its stakes in two small, unprofitable electric vehicle subsidiaries to its parent, Zhejiang Geely Holding Group Co.
The move is part of a plan to “consolidate and enhance its product portfolio and thus brand image by focusing on relatively higher-end automobiles going forward,” Geely said in a statement last week.
Geely holds a 50 percent stake in Kangdi Electric Vehicle Group Co. and a 45 percent interest in Ninghai Zhidou Electric Vehicles Co.
It will divest the interest in Kangdi for 725 million ($110 million) yuan and the stake in Zhidou for 621 million yuan.
At the start of the year, the Chinese government raised the minimum speed of EVs that qualify for subsidies to 100 km/hour. The change in policy has disqualified the two companies’ EVs for subsidies as both city EVs only reached a maximum speed of 99 km/hour.
As a result, Kangdi posted a loss of 480 million yuan ($73 million) and Zhidou lost 890 million yuan in the first half of the year.
In June, Geely expected to sell at least part of its interest in Zhidou to a third party. But it failed to secure a buyer.
Geely, based in the east China city of Hangzhou, is listed in Hong Kong. Its parent company, Geely Group, also owns Volvo. It is partnering with Volvo to develop a new generation of EVs, plug-in hybrids and hybrids.
Geely expects alternative energy vehicles to account for 90 percent of its annual sales by 2020.