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China's Wanxiang plugs Fisker bid, open to Tesla ties

A logo of Wanxiang Group is seen at China International Auto Parts Expo in Beijing, April 24, 2012. REUTERS/Stringer
A logo of Wanxiang Group is seen at China International Auto Parts Expo in Beijing, April 24, 2012. REUTERS/Stringer

By Samuel Shen and Norihiko Shirouzu

HANGZHOU/BEIJING (Reuters) - Billionaire Lu Guanqiu, a former blacksmith's apprentice who built China's biggest auto parts company, says he has an edge over a rival bid for bankrupt U.S. plug-in hybrid car maker Fisker Automotive, and would welcome ties with Tesla Motors Inc , another U.S. electric car maker.

"We have support from Fisker's creditors, we have support from the local government, and we have a track record of 20 years of responsible investment in the United States," Lu told Reuters in an interview at the headquarters of his Wanxiang Group in China's eastern city of Hangzhou. "These are our advantages. The bid is not just about who pays more."

Wanxiang America will square off with Richard Li, a son of Hong Kong tycoon Li Ka-shing, at a February 12 auction for Fisker, a failed rival to Tesla in electric cars. California-based Fisker, backed by U.S. taxpayer money, stopped making its sleek, Karma sports car in 2012 and filed for bankruptcy protection in November last year.

Last month, just days before Fisker was to be sold to Hybrid Tech Holdings, an affiliate of Li's, Wanxiang made a surprise bid, prompting a U.S. bankruptcy judge to call for an open auction.

Lu, 69, said Wanxiang, which owns A123 Systems Inc, a maker of batteries for Fisker's cars, is better placed to restart and expand production at Fisker, and would shift production from Finland to the United States, creating American jobs.

TESLA TIES

But Lu said he would walk away if the Fisker price is too high - Hybrid Tech has said its initial bid would be worth $55 million - and seek opportunities elsewhere, adding he's open to cooperation with other electric car makers, including Tesla.

"Of course we want to pocket Fisker. But we will bid rationally," he said. "Whatever the result, nothing can stop us from making electric cars."

"We have been in frequent touch with Tesla. We supply Tesla, and recently I asked our American unit how (we could) deepen our connection with Tesla. I want to use whatever resources in the world we can use, unite whatever force we can unite, ally with whichever partner we can find."

"We will cooperate with whoever is best ... as long as they choose us as well. It cannot be merely unrequited love."

Wanxiang America, headed by Lu's son-in-law, said it had no relationship with Tesla. A spokesperson for Tesla in Asia declined to comment.

GOING ELECTRIC

Since the global financial crisis, Chinese firms have been buying troubled assets of Western automakers as they look to expand globally and secure access to advanced technologies. In 2010, Zhejiang Geely Holding bought Sweden's Volvo Car from Ford Motor Co , and state-owned Dongfeng Motor Group Co <0489.HK> is in talks to invest in struggling French carmaker PSA Peugeot Citroen .

For Lu, Wanxiang's interest in Fisker reflects a 30-year ambition to have his company grow from making parts for cars to making cars themselves. "As long as Wanxiang exists, we will pursue our dream to make electric cars, whatever the obstacles," he said.

While China's industrial policymakers won't want to see yet another company making gasoline-fuelled cars - they are looking to consolidate a fragmented industry of over 70 registered automakers - they are encouraging the production of greener cars, particularly those with electric car technology. By pushing electrification, Beijing hopes its car makers can leapfrog global rivals that dominate China's auto market, the world's biggest.

Wanxiang has been working towards that goal for years through a series of green technology investments, such as in Smith Electric Vehicles Corp , a U.S. maker of electric commercial vehicles, and U.S. green tech firm GreatPoint Energy. The $20 billion industrial conglomerate also formed a joint venture with U.S. lithium-ion battery maker Ener1 Inc , and last year bought A123 Systems.

"We have poured 5 billion yuan ($826 million) into the new energy business, but not made a single penny," Lu said. "But I believe it's a business that will promise big bucks in the future."

RAGS-TO-RICHES

Wanxiang America, headquartered in Elgin, Illinois, operates 28 manufacturing plants in 14 states and employs about 5,600 U.S. workers. The Chinese group says it supplies parts to one in every three cars produced in the United States.

That's a far cry from where Lu started.

Born into a farmer's family, Lu dropped out of school in the 1960s and worked in a smithy before starting a bicycle repair shop, according to Wanxiang's website. In 1969, Lu and six other farmers pooled $500 to set up a tractor repair shop, and went on to make universal joints - called Wanxiang in mandarin - that are used in driveshafts.

Wanxiang's product line has since expanded, adding more complex and sophisticated parts and module systems, capitalizing on China's market reforms and the explosive growth in the autos market. The group has built China's biggest production base to make lithium-ion batteries, and last year obtained regulatory approval to make electric vehicles - part of Beijing's program to put 5 million all-electric vehicles or "near all-electric" plug-in hybrids on the road by 2020.

That scheme puts China in sharp contrast with a global auto industry which sees a more limited future role for electric cars, and is betting more on fuel-cell models.

"Our goal is to resume production at Fisker and bring its products back to the market ... initially in the U.S. and then to the world," Lu said, adding there were no plans to change the Fisker brand in the United States, though Wanxiang would feature on the nameplate of any cars ultimately made in China.

"I don't expect any political obstacles in this deal because it's about making passenger cars, not military equipment," said Lu, adding he has little personal relationship with Li, but respects his billionaire father.

($1 = 6.0513 Chinese yuan)

(Editing by Ian Geoghegan)

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