Silk-FAW, US-China Joint Venture Still Troubled To Build Luxury Electric Car Factory In Italy

Hongqi, Silk-FAW joint venture electric car. (photo: twitter @hongqi)

JAKARTA - The regional government of Emilia-Romagna, Italy, will hold talks with Silk-FAW next week over concerns that a planned Sino-US joint venture to invest one billion euros in producing electric sports cars in the area may not go ahead.

Silk-FAW, a start-up between US automotive engineering and design firm Silk EV and Chinese automaker FAW, plans to develop and manufacture electric and hybrid luxury hypercars in China and in Italy under the Hongqi brand.

Last year they chose to build a production facility and research center, in the city of Reggio Emilia. This is an area known as Italy's "Valley of Motors". The region is also home to luxury sports car brands Ferrari, Lamborghini, Maserati and Ducati.

Their production is expected to start in early 2023. However, the plan has not made any significant progress. Silk-FAW still has some problems finalizing a mortgage contract to buy land for the mill.

Vincenzo Colla, head of economic development at the local government of Emilia Romagna, told Reuters he had summoned Silk-FAW executives on July 14 to assess the plan and whether the company had enough funds to continue with the promised investment a year after they did, before making it public. .

"They have to let us know if the project is going ... and, if it does, that means the financial resources are there. If the project dies, they just have to let us know," Colla said. "We're obviously worried."

"Until today the financial flow has not been in accordance with the needs," said Colla. "We look forward to seeing a financial roadmap to make this investment sustainable."

Silk-FAW - which operates through an Italian company owned by another company based in Ireland. It is 85% owned by Silk EV chairman and founder Jonathan Krane and the remaining 15% is owned by FAW. The company in Italy currently employs 75 people.

They also have not disclosed financial data or details about the funding to the public.

Managing Director, Katia Bassi told Reuters on Wednesday, July 6, that Silk-FAW will provide clarification next week on various issues, including their financial matters.

He declined to provide further details. He also added that despite the delay in the land purchase, the company is continuing to develop two models it wants to produce in Italy, the S9 hybrid hypercar and the S7 electric sports car.

Bassi said Silk-FAW was seeking to increase the investment amount by more than 1 billion euros (IDR 15.2 trillion) for the plan.

"That's the amount needed for this project, it's a fact, obviously we can't go back or do it less," he said.

For Italy itself, the development of this luxury electric car is considered very strategic. In addition to increasing the target for the fulfillment of environmentally friendly car production, the factory will also absorb a large number of workers.

Asked if Silk-FAW would eventually start building cars in Italy, he replied "this is our goal".