Israel Corp, Chery cut funds for China car venture

The Israel Corp holding company said on Sunday the initial investment in its joint venture to build cars in China would be cut to $500 million for 2009-2010 from the originally planned $900 million.

Chery Quantum Auto Co is a joint venture between Israel Corp's subsidiary Quantum and China's Wuhu Chery Automobile Investment Co.

The two sides also decided to change the holdings in the joint venture so that Quantum would own 50 percent instead of the 45 percent it currently holds. Chery's stake will fall to 50 percent from 55 percent, Israel Corp said in a statement.

The Israeli company said the initial investment for 2009 and 2010 would be reduced as a result of a decision to develop fewer models and the postponement in building a special factory. The two sides have decided to use Chery's current production facilities for the time being, Israel Corp said.

Quantum will not be required to inject any more money in 2009-2010 beyond the $200 million it has already invested. An additional investment of $40 million, if need be, could be made in 2011 at the earliest, Israel Corp said.

Chery Quantum Auto will build electric cars as well as conventional automobiles, it said.