COOPERATION AGREEMENT – President Ferdinand R. Marcos Jr. witnessed the signing of the Cooperation Agreement between Jaime Augusto Zobel de Ayala, Chairman of the Board of Directors of AC Industrial Technology Holdings, Inc. and Zero Motorcycles Chief Executive Officer Sam Paschel for the pioneering $250-M electric motorcycle manufacturing in the Philippines. Also in photo are Trade and Industry Secretary Alfredo E. Pascual (left standing) and Manila Ambassador to Washington D.C. Jose Manuel Romualdez (right standing).

Integrated Micro-Electronics Inc. (IMI), Ayala Group’s electronics’ manufacturing arm, and American firm Zero Motorcycle Corp. have signed a cooperation agreement for a $250-million investment in the manufacture of electric motorcycles in the Philippines for export to Europe, Asia, among other markets.

The cooperation deal was among the highlights during President Ferdinand R. Marcos Jr.’s five-day working visit to the US. Jaime Augusto Zobel de Ayala, chairman of the Board of Directors of AC Industrial Technology Holdings, Inc., and Zero Motorcycles was represented by its Chief Executive Officer Sam Paschel signed the cooperation agreement on May 1 witnessed by the President and other Philippine government officials.

Trade and Industry Secretary Alfredo E. Pascual, who also witnessed the signing, said in a statement that based on the agreement, Zero Motorcycles will subcontract its manufacturing operations vis-a-vis electric motorcycle assembly and other related sub-assemblies, such as battery and motor assembly, to IMI.

Pascual said that the project requires $250 million investments over the next five years and produce 18,000 e-motorcycle units annually in five years for export to Zero's Europe, Asia, and other markets from IMI’s headquarters in Binan, Laguna. The project is also expected to generate  annual revenues of $65 million in the next 5 years.

Zero Motorcycles and IMI have agreed on a preliminary timetable with the goal of starting mass production by June 2023.  Zero’s electric motorcycles will be made available in 2024 through AC Industrials.

Pascual noted that the IMI-ZERO operations is a pioneering activity for the Philippines for the assembly of an electric motorcycle platform.

Under the terms and conditions of the agreement, IMI is expected to provide the needed manufacturing facility in the Philippines. Currently, IMI's headquarters is located in Biñan, Laguna, where they operate as an original equipment manufacturer (OEM) in diversified sectors that include automotive, industrial, medical, telecommunications infrastructure, storage devices, and consumer electronics.

"We look forward to such amazing collaboration to help bring their innovative electric motorcycles to the world. This partnership aligns with our commitment to supporting companies in their growth and sustainability efforts while providing high-quality manufacturing services," said Arthur R. Tan, chief executive officer of IMI was also quoted in the statement.

IMI said it is uniquely positioned to have both the competency of electronics manufacturing as well as bike assembly under one roof. IMI provides global manufacturing solutions, including innovative electronics manufacturing services (EMS) and power semiconductor assembly and test services (SATS) for diversified markets such as those in the automotive, industrial, aerospace, and other industries.

Sam Paschel, chief executive officer of Zero Motorcycles, said “Expanding our manufacturing footprint into a new region allows us to efficiently scale up to meet the rapidly growing demand for our products and improve customer delivery and satisfaction in the fast-growing EV market. We are thrilled to partner with IMI and bring their expertise in electronics manufacturing and motorcycle assembly to the Zero Motorcycles lineup of products."

Zero added that it is “in the process of globalizing our manufacturing business” and described the Philippines as a “clear choice” for its business.
“The Philippines… for us [is] a perfect partner for us to expand our manufacturing. This is a good place for us to build a global manufacturing base,” a representative of ZERO said.

For his part, Pascual said, "We thank Zero Motorcycles for their trust. This is considered a historic agreement because it is a pioneering activity involving high-end electric batteries, motors and motorcycle assembly. With this investment, we will be better positioned as an export manufacturing hub for electric batteries and vehicles in the region. This partnership between IMI and Zero Motors is a testament to the expertise and capabilities of our local manufacturing sector.”

IMI has expertise in both electronics manufacturing and motorcycle assembly all located under one roof. The strategic manufacturing collaboration involves both the full assembly of the motorcycles as well as partial, modular assemblies. IMI will assemble Zero’s electric motorcycle models and other assemblies in their facility in Laguna in conjunction with the manufacturing facilities for Zero in Scott’s Valley, California.

Meantime the DTI and the Electric Vehicle Association of the Philippines (EVaP) are pushing for the inclusion of electric motorcycles and electric scooters in the list of electric vehicle categories eligible for zero duty importation.

EVaP President Edmund Araga said the association has been working tirelessly to promote and advance the adoption of electric vehicles (EVs) in the country.
However, there has been a misconception that EVaP does not support the DTI’s position of scrapping import tariffs for 2-wheel electric-Motorcycle. In reality, EVAP has been pushing for all EVs to be zero tariff, including two-wheel vehicles  except for e-Jeeps and e-Trikes which  have local manufacturing and assembly in country.
Reports quoted the DTI Secretary said that the e-motorcycles category was not included in the EO 12, grating zero tariff on the importation of EVs because it was opposed by the Motorcycle Vehicle Development Program Participants Association (MDPPA) and EVaP.

“It was ironic that we were disappointed when the 2-wheel electric motorcycle was excluded in the EO 12. In fact, he said, during the inquest of the Tariff Commission, we always promote for the inclusion of all types of full EV models including 2-wheels,” said EVaP Chairman Ferdinand Raquelsantos.

Raquelsantos noted that before a company can start local manufacturing, it will import some models for test market purposes. Thus, the need to allow the zero-duty on
their initial importation to encourage investors to invest in local manufacturing.

Araga also pointed out that the grant of zero duty would not only benefit consumers by making EVs more affordable, but it would also help the country achieve its goals of reducing greenhouse gas emissions and improving air quality.

EVaP has been working closely with the government and other stakeholders to create a more favorable environment for EVs in the country. They have been advocating for the implementation of supportive policies, such as tax incentives and charging infrastructure development, to encourage the adoption of EVs.