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Phoenix Motor Inc. (OTCID:PEVM), a micro-cap electric vehicle company with a market capitalization of $7.39 million, announced Monday that it has entered into a Cooperation Agreement with Shandong Maolin Sida Automobile Co., Ltd., Mengzhou Enbowei Automobile Technology Co., Ltd., and the individual shareholders of Enbowei. The announcement was made through a statement based on a recent SEC filing. According to InvestingPro analysis, the company has shown impressive revenue growth of 143% in the last twelve months, though it currently maintains a weak overall financial health score.
Under the agreement signed Thursday, Phoenix Motor will form a wholly owned subsidiary in Mengzhou, China, with a registered capital of RMB 20 million. The capital will be contributed in stages as operational needs arise.
As part of the arrangement, Maolin Sida will grant the new subsidiary an exclusive license, valid throughout China for ten years, to manufacture and sell certain electric vehicle platforms, identified as the LV and QV platforms. The license fees are structured to be 0% of the bill of materials (BOM) cost for the first two years, 50% of the stated BOM rate for years three and four, and 100% thereafter. The stated rates are 3% of BOM cost per vehicle for up to 10,000 units, 2% for 10,001 to 30,000 units, and 1% for more than 30,000 units.
Enbowei has agreed to provide its existing manufacturing facilities, equipment, and related infrastructure to the new subsidiary free of charge for ten years. The subsidiary will be responsible for ongoing utilities and operating costs. The agreement allows for a possible five-year extension upon mutual consent.
According to the filing, all equipment, improvements, and intellectual property developed under the agreement will belong to the new subsidiary.
After more than five but less than ten years of continuous operation, Phoenix Motor may acquire a 51% equity stake in Enbowei for a nominal consideration of RMB 1, subject to a separate definitive agreement.
The Cooperation Agreement will automatically terminate if the subsidiary does not commence operations within three months of its formation.
This summary is based on information provided in a press release statement and the company’s SEC filing.
In other recent news, Phoenix Motor Inc. has been actively addressing several significant developments. The company recently held its 2024 Annual Meeting of Stockholders, where shareholders approved various proposals, including the election of directors and a reverse stock split aimed at maintaining its Nasdaq listing. The reverse stock split, with a ratio between 1-for-1.5 and 1-for-5, was authorized by stockholders to address Nasdaq’s minimum bid price requirement, which the company has struggled to meet. Additionally, Phoenix Motor was notified by Nasdaq of a pending delisting due to non-compliance with listing rules, specifically the minimum bid price and the failure to hold an annual meeting within the required timeframe.
In a strategic move, Phoenix Motor has partnered with ADASTEC Corp. to develop 40-foot battery-electric buses equipped with advanced autonomous capabilities. This collaboration aims to enhance public transit systems in North America by combining PhoenixEV’s zero-emission vehicle expertise with ADASTEC’s Level-4 automated driving software. The first vehicle from this partnership is expected to debut later in 2025, with demonstration pilots planned for early 2026. These recent developments highlight Phoenix Motor’s efforts to navigate regulatory challenges while advancing its technological offerings in the electric vehicle market.
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