Proton Holdings Bhd. signed a deal to manufacture electric cars for Netherlands-based Detroit Electric Holdings Ltd. that will generate as much as two billion ringgit ($553.2 million) in revenue over four years for the Malaysian car maker, a Proton official said.
Proton said Detroit Electric will incorporate styling changes to distinguish its electric cars from Proton's existing lineup. Detroit Electric Chairman and Chief Executive Albert Lam said the cars will be sold for between $23,000 and $33,000 each, depending on battery size, which determines the distance that can be traveled with a single charge.
Syed Zainal Abidin Syed Mohamed Tahir, Proton's managing director, said after the signing that the estimated income from the deal is conservative and based on the 40,000 cars it is expected to produce for Detroit Electric. He declined to disclose the margins Proton expects from the deal.
The pact effectively allows Detroit Electric to utilize the platforms of two Proton vehicle models, namely the Persona and Gen2, for the electric cars, which will be powered by lithium-ion batteries developed by the Dutch company and marketed under the Detroit Electric brand. Proton said the license and contract assembly agreements are valid for five years.
Mr. Syed Zainal said Proton is studying the technology and the market for electric cars, as it has the right to sell Proton-branded electric vehicles powered by Detroit Electric's engines in Southeast Asia as well as in member countries of the Organization of Islamic Conference.
"We hope to come out with our own electric vehicle," Mr. Syed Zainal said, without committing to a specific timeframe.
Mr. Lam said Detroit Electric plans to sell 40,000 of the battery-powered sedans to be built at the Malaysian car maker's Tanjong Malim plant in its first year. It plans to ramp up production to 270,000 units annually in four years. He said rollout of the first vehicle is slated for February 2010.
Detroit Electric, Mr. Lam said, expects to pay some 1.2 billion ringgit to Proton in the first year of production, but didn't disclose the total cost for the five-year period of the contract.
European countries such as Denmark, the Netherlands and Spain, which have legislated hefty pollution taxes, will likely account for between 60% and 75% of the initial sales, Mr. Lam said. China and the U.S., where governments have been adding incentives to develop technologies that reduce greenhouse gas emissions, will also be target markets.
