Silk EV and FAW to build sports cars under Hongqi

Silk EV, a U.S.-based engineering and design firm, said it prepares to invest 10 billion yuan ($1.41 billion) to make sports cars with Chinese automaker FAW Group under the brand of choice of Chinese revolutionary leader Chairman Mao Zedong, Hongqi.

Silk EV on Monday informed Reuters it has signed a memorandum of understanding with FAW to start a joint venture in the state-owned automaker’s hometown of Changchun, located in northern China, to built cars it has dubbed the S-series.

The plan was first reported on Friday by China’s state media CCTV and Xinhua. FAW verified the CCTV report to Reuters.

SILK EV is an automotive engineering and design company. It has operations in Italy, China, and the United States.

Silk EV is focused on the China auto market. It launched a company in Shanghai’s free trade zone in April 2019 with registered capital of 1 million yuan ($141,281), a filing showed on the official National Enterprise Credit Information Publicity System.

Hongqi, meaning Red Flag, was started by FAW in 1958 and is widely recognized as a symbol of China’s ruling Communist Party, with former leader Mao Zedong often seen riding in high-end black saloons.

It has undergone several overhauling over the decades, falling out of favor in the 1980s and now enjoying a recovery as the government promotes home-grown brands.

FAW aims for annual Hongqi sales to increase two times to 200,000 vehicles this year and reach 1 million by the end of the decade. Its plans the brand to include 21 models by 2025.