China XD Plastics Company Limited ("China XD Plastics" or the "Company"), (Nasdaq: CXDC), one of the leading Chinese manufacturers engaged in the development, manufacture, and distribution of modified plastics primarily for use in automotive applications in China, today announced that it has signed an exclusive agreement with Ningbo Huazhong Plastic Products Company Limited ("Ningbo Huazhong") to develop and supply modified plastics for use in electric vehicles.
As part of the agreement, China XD Plastics maintains the right to develop products for other automotive plastic manufacturers.
Ningbo Huazhong is a certified automotive parts supplier for a number of leading automotive OEMs in China, including China FAW Group, Shanghai Automotive Industry Corporation, Beijing Automotive Works and China Second Automobile Group, among others. According to the agreement, China XD Plastics will have the exclusive rights during the next three years to develop high-performance new plastic materials for use in Ningbo Huazhong's electric vehicle parts, with a primary focus on battery modules, charging stations and other applications.
Due to the many advantages of electric vehicles, including greater energy efficiency and lower emissions, the Chinese government has indicated in its twelfth five-year plan that it will invest 4 trillion Yuan, approximately $600 billion US dollars, to support the development of nine industries, including alternative energy automobiles and environmentally friendly new materials. By 2012, automobile production in China is expected to exceed 20 million units, with alternative energy vehicles expected to account for 10%, or over two million units, of total automobile production. Total demand for the new plastic materials for use in alternative energy vehicles is projected to exceed 250 thousand metric tons by 2012. China XD expects to derive additional growth opportunities by capitalizing on the development of the alternative energy vehicle market in China.
Mr. Jie Han, Chairman and CEO of China XD Plastics, commented, "We are pleased to announce our broadened strategic partnership with Ningbo Huazhong. We believe that this alliance further validates our leading position in the developing market for plastic materials for use in electric vehicles, while speaking volumes to our continuing R&D capability. We will continue to seek additional opportunities in this growing market, and we believe China XD is well positioned to meet the increasing demand for electric vehicles and other high-end modified plastics end markets."