Electric vehicle firm Sevcon has launched a new joint venture in a bid to secure a significant share of the rapidly-growing Chinese market.
The Gateshead-based business has announced the agreement with Risenbo Technology Co Ltd, a subsidiary of a Chinese Tier 1 automotive supplier based in Hubei Province, having recently been given the required approval of the government authorities in China.
Operating as Sevcon New Energy Technology Company Ltd, the new firm – in which Sevcon and Risenbo each will own a 50% stake – will source from Sevcon and market and sell existing and future Sevcon products for on-road electric and hybrid vehicle applications.
The venture comes as the NASDAQ-listed firm reports an impressive first-quarter surge in sales, with revenues up 36% to $9m (£5.5m) from $6.6m (£4m), a reversal of a difficult trading time.
The company, which employs 115 people, also produced pre-tax profits of $710,000 (£435,000), compared with a loss of $1.2m (£730,000) in the corresponding period, and said the lift for the three months to December 31 reflects improving conditions in its markets.
President and chief executive Matt Boyle said: “Sevcon’s revenue growth in the first quarter was driven by increased product shipments in the majority of our markets, and in all three of the geographic regions we serve.
“Our sales growth in North America was driven by substantially stronger demand, year-over-year, in our traditional off-road markets, primarily for fork-lift truck and aerial work platform applications.
“Demand also was significantly higher in Japan and China, primarily for off-road applications as well. Although the European economy still faces challenges, this was our second consecutive quarter of growth in that region.
“Partnering with Risenbo is a unique strategic opportunity for Sevcon to gain greater access to the world’s largest electric and hybrid vehicle market.
“China has long been one of our most important growth regions, driven by increasing product demand in our traditional off-road, industrial, construction and mining markets.
Sevcon’s strong trading performance follows a difficult period in late 2012 to early 2013 which resulted in a 10% drop annual revenues to £19.6m for the year ending September 30, 2013.
Boyle added: “Looking forward, the underlying demand patterns appear to be strengthening in the majority of our markets worldwide.
“While rebuilding our momentum on the top line we are making progress on the bottom line as well.”