LOTUS Cars will this month be handed over to its new owner, Zhejiang Geely Holding Group, after the Chinese vehicle manufacturer bought a 51 per cent controlling stake in Lotus for the equivalent of $A83 million.

It follows Geely’s purchase of 49.9 per cent of Lotus owner, Proton, from Malaysian conglomerate DRB-Hicom (DRB) which will retain the balance of Proton shares. The Lotus purchase could not go ahead until the Proton stake was completed.

Geely will hold its share in Lotus along with a private company called Etika Automotif Sdn Bhd (EASB), a subsidiary of Etika Strategy that is owned by Tan Sri Syed Mokhtar Al-Bukhary, who controls DRB.

The tangled sale and cross shareholding results in the 65-year-old Lotus potentially gaining sufficient funds to develop its long-awaited range of new cars.

The first new model is expected to be the replacement for the Elise and be similar to the concept car shown first in 2010. The current Elise is now 11 years old.

In an interview with Bloomberg, Lotus CEO Jean-Marc Gales said: “This is fantastic, the best thing that could have happened to us”.

He said it could lead to a new Elise in 2020 and moves into electric sportscars.

“In two or three years, battery cars will be much higher performing than they are currently because technology moves on,” he said.

“It could be a really good thing to be the first one to do an electric car that doesn’t weigh two tonnes.”

Lotus registered a net loss of $A13 million and had net assets of $A15.8 million in the 2017 financial year.

DRB was paid $A32.5 million cash by Geely for the Proton share. It now has the rights to manufacture and distribute Geely’s SUV, the Boyue, in South-East Asian right-hand-drive markets that include Thailand, Singapore and Indonesia.

Geely bought its Lotus share from Proton for $A83 million and EASB bought the remaining 49 per cent for $A80 million.

Geely’s main vision with its Proton purchase is to expand its models into South-East Asia. In addition to the Boyue, it has passenger cars in the A, B, C and D segments under Emgrand, Vision and GC9 brands that have combined sales of about 20,000 units a month in China.

Geely will allow Proton to rebadge, manufacture, sell, market and distribute a list of Geely vehicle models for five years and expand sales to other South-East Asian countries.

DRB will maintain management control of Proton but production will be jointly managed by Geely and DRB.

Geely – which also owns Volvo Cars, the London Taxi Company and specialist car-maker Lynk & Co – is expected to use Lotus research in composite materials and lightweight technology in its vehicle range and to help it comply with more stringent emission regulations in China.

Proton has agreed to pay for the relocation of the current car factory to another site in Malaysia within six years.

This move is also seen as a way for Geely to introduce the assembly of Volvo Cars in Malaysia for sale throughout South-East Asia’s right-hand-drive markets.

Proton made a net loss of $A189 million in the 2017 financial year and has net asset of only $A5.8 million. However, it has been receiving annual grants from the Malaysian government with the latest being $A350 million.

By Neil Dowling