- Highly Group Expands New Energy Vehicle Thermal Management Business

On April 18, 2021, the global headquarters of Highly Marelli Holdings Co., 
Ltd., a subsidiary of Highly Group, started operations and a new energy vehicle 
thermal management system launch conference was held in Pudong, Shanghai.

Highly, a subsidiary of Shanghai Electric Group, issued A and B shares on the 
Shanghai Stock Exchange of China in 1992 and 1993, respectively. It is the 
world's leading R&D and manufacturer of core components for white goods and new 
energy vehicles, and cooling and heating related products. There are three 
major industry sectors: "compressors and core components, auto parts, and 
cooling and heating products", with products covering hundreds of millions of 
households in 165 countries and regions around the world.

As the world's largest manufacturer of non-self-supporting household 
air-conditioning compressors, Highly has been seeking breakthroughs in 
industrial development in recent years, and has successively entered businesses 
such as electric air-conditioning compressors for new energy vehicles and auto 
parts castings. Based on the four-core competitiveness that Highly has formed 
over the years: technology research and development capabilities in the 
electromechanical field, large-scale lean manufacturing management 
capabilities, large-scale operating cost control capabilities, B2B marketing 
capabilities. The company has strategically put the auto parts business as a 
key development industry sector and has been actively seeking entry 
opportunities.

On August 29, 2019, Highly and Marelli signed the "Memorandum of Intent for 
Cooperation". Marelli is one of the world's leading global independent 
suppliers in the automotive industry, with approximately 60,000 employees 
worldwide, 170 institutions and R&D centers in Asia, America, Europe and 
Africa, and sales revenue of 13.6 billion euros in 2019. On September 4, 2020, 
Highly and Marelli formally signed an auto parts joint venture project. This 
project includes Marelli's divestiture and reorganization of its automotive 
air-conditioning compressors and air-conditioning system assets and businesses, 
and established Marelli Hong Kong as the main body to integrate the target 
assets and business. Highly acquired 60% of Marelli Hong Kong. After the 
completion of the project, the joint venture company was renamed Highly Marelli 
Holdings Co., Ltd. On January 28, 2021, Highly and Marelli completed the 
delivery of the business.

The Highly Marelli joint venture project is not the first cooperation between 
the two companies. In August 2019, Marelli also acquired a 25% stake in 
Shanghai Highly New Energy Technology Co., Ltd., a subsidiary of Highly, and 
reached a cooperation between the two parties in the electric air-conditioning 
compressor business of new energy vehicles.

After its establishment, Highly Marelli's operating headquarters are located in 
Shanghai, China and Saitama, Japan. At present, the company has 28 factories 
and 5 R&D centers and technical service institutions in 9 countries including 
China, Japan, the United States, Thailand, Malaysia, India, South Korea, the 
United Kingdom, and Spain. Highly Marelli will devote itself to the research 
and development, manufacturing and sales of world-class automotive air 
conditioning systems and new energy vehicle thermal management systems, making 
full use of the advantages of both parent companies in the field of auto parts, 
exerting synergies, and expanding the global market. While becoming a 
world-class Cabin Comfort system solution provider, it has transformed into the 
world's leading supplier of automotive thermal management systems.

At the launching ceremony of the global headquarters, Highly Marelli also 
released the latest thermal management system products for new energy vehicles. 
The system uses heat pump technology as the core and integrates Highly's 
ultra-high efficiency scroll electric compressor and Marelli air-conditioning 
system technology to greatly improve the energy efficiency ratio of 
air-conditioning and greatly increase the mileage of new energy vehicles in 
winter. The system has a Multi-Function Receiver with unique control functions, 
which enables the heat pump system to have cooling, heating, dehumidification, 
and defrosting functions, and achieves a high degree of integration, which 
improves the vehicle's loadability. The scope of the system's working 
environment is expanded and can be used in the global market environment, while 
the system security is greatly improved. Relying on the excellent performance 
of this system product, Highly Marelli has already contacted several leading 
auto OEMs in Europe, America and Japan and major new Chinese automakers to 
promote system matching projects.

China is the world's largest automobile market, and new energy vehicles account 
for the world's leading share, containing huge market opportunities. In the 
next phase, Highly Marelli will integrate global resources, invest more 
resources in the Chinese market, establish a global R&D center and build 
factories for key components in China, and use the world's first-class product 
quality and leading technology to better serve China's new energy vehicle 
thermal management system market.

Through the joint venture with Marelli, Highly will have a global layout of 
automotive air-conditioning compressors and air-conditioning systems, as well 
as world-class R&D capabilities and customer resources, and become the world's 
leading supplier of automotive air-conditioning compressors and 
air-conditioning systems. Highly's electric vehicle air-conditioning compressor 
business will also have a synergistic effect with Marelli heat pump systems and 
other businesses to provide complete environmental system solutions for new 
energy vehicles, and promote Highly's rapid expansion and strength in the new 
energy auto parts field, build Highly's "second main business", and realize 
Highly's three major transformation strategies: development from the white 
goods to auto parts, from the core components to system integration, and from 
domestic market-oriented to international layout.

SOURCE  Highly Marelli Holdings Co., Ltd.