10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to _________

Commission File Number    001-32534

ZAP
(Exact name of registrant as specified in its charter)
California	94-3210624
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
501 4th Street Santa Rosa, California	95401
(Address of principal executive offices)	(Zip Code))
Registrant’s telephone number, including area code: (707) 525-8658

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filer required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 Large accelerated filer  o Accelerated filer  o Non-accelerated filer  o Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o   No  x

As of May 15, 2013 there were302,518,002 shares outstanding of the registrant’s common stock.

1

INDEX

		Page No.
PART I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012.	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012.	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43
PART II. Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
SIGNATURES		46

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31,		December 31,
ASSETS	2013		2012
Current assets:
Cash and cash equivalents	$	1,205	$	1,656
Restricted Cash		16,054		11,763
Notes receivable		714		947
Restricted Notes receivable		-		678
Accounts receivable		6,398		5,736
Inventories, net		9,619		11,152
Prepaid expenses and other current assets		2,084		502
Total current assets		36,074		32,434
Property, plant and equipment, net		52,521		53,357
Land use rights, net		9,786		9,767
Other assets:
Investment in joint ventures		417		898
Distribution fees for Jonway Products and
Better Worlds Products		10,919		11,279
Intangible assets, net		4,499		4,571
Goodwill		324		324
Due from related parties		2,867		3,093
Deposits and other assets		260		241
Total other assets		19,286		20,406
Total assets	$	117,667	$	115,964
LIABILITIES AND  EQUITY
Current liabilities:
Short term loans	$	13,570	$	8,754
Senior convertible debt		20,084		19,693
Accounts payable		21,677		22,386
Accrued liabilities		7,742		8,549
Notes payable		22,690		18,513
Advances from customers		2,066		3,782
Taxes payable		1,232		850

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Due to related parties		390			1,159
Other payables		2,688			3,102
Total current liabilities		92,139			86,788
Long term liabilities:
Warranty costs		205			229
Total liabilities		92,344			87,017
Commitments and contingencies
ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized;
302,518,002  shares issued and outstanding
at March 31, 2013 and December 31, 2012, respectively		229,870			229,785
Accumulated other comprehensive income		1,295			1,190
Accumulated deficit		(220,181	)		(217,421	)
Total ZAP shareholders’ equity		10,984			13,554
Non-controlling interest		14,339			15,393
Total equity		25,323			28,947
Total liabilities and equity	$	117,667		$	115,964

See accompanying notes to the unaudited condensed consolidated financial statements

4

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands; except per share data)

(Unaudited)

	For the Three Months ended March 31,
	2013			2012
Net sales	$	14,365		$	12,181
Cost of goods sold		(13,615	)		(11,479	)
Gross profit		750			702
Operating expenses:
Sales and marketing		1,433			2,112
General and administrative		1,976			2,491
Research and development		150			279
Total operating expenses		3,559			4,882
Loss from operations		(2,809	)		(4,180	)
Other income (expense):
Interest expense, net		(822	)		(486	)
Loss from equity investment in  joint venture		(485	)		(119	)
Other income (expense), net		188			235
Total other income (expense)		(1,119	)		(370	)
Loss before income taxes		(3,928	)		(4,550	)
Income tax benefit		13			38
Net Loss	$	(3,915	)	$	(4,512	)
Less: Net loss attributable to non-controlling interest		1,155			1,073
Net loss attributable to ZAP common shareholders	$	(2,760	)	$	(3,439	)
Net loss		(3,915	)		(4,512	)
Other Comprehensive income (loss)
Foreign currency translation adjustments		206			(187	)
Net unrealized (loss) on available for sale securities		-			(474	)
Other comprehensive income/(loss)		206			(661	)
Total comprehensive loss		(3,709	)		(5,173	)
Less : Comprehensive loss attributable to non-controlling interest		1,054			1,165
Comprehensive loss attributable to ZAP common shareholders	$	(2,655	)	$	(4,008	)
Net loss per share attributable to common shareholders:
Basic and diluted	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding:
Basic and diluted		302,518			298,217

See accompanying notes to the unaudited condensed consolidated financial statements

5

ZAP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	For the Three Months ended March 31,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(3,915	)	$	(4,512	)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based employee compensation		85			671
Stock-based compensation for services		-			105
Depreciation and amortization		1,605			1,799
Amortization of Distribution fees		360			-
Inventory Reserve		(74	)		95
Provision for (recovery of) doubtful accounts		(6	)		(3	)
Loss from joint venture and other investments		485			119
Deferred tax benefit		(13	)		(38	)
Amortization of debt discount		391			-
Changes in assets and liabilities
Accounts receivable		(617	)		34
Notes Receivable		919			729
Inventories		1,673			(357	)
Prepaid expenses and other assets		(1,582	)		(723	)
Due from related parties		(518	)		-
Accounts payable		(764	)		299
Accrued liabilities		(385	)		(876	)
Taxes Payable		320			(245	)
Advances from customers		(1,758	)		2,625
Due to related parties		-			(1,284	)
Other payables		(912	)		(363	)
Net cash used in operating activities		(4,706	)		(1,925	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(335	)		(597	)
Net cash flows used in investing activities:		(335	)		(597	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		13,316			670
Proceeds from short term loans		5,558			522
Change in restricted cash		(4,197	)		266
Repayments to related parties		-			(2,001	)
Repayments of notes payable		(9,167	)		-
Repayments on short term loans		(817	)		(852	)
Net cash provided by (used in) financing activities		4,693			(1,395	)

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Effect of exchange rate changes on cash and cash equivalents		(103	)		(20	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(451	)		(3,937	)
CASH AND CASH EQUIVALENTS, beginning of period		1,656			5,859
CASH AND CASH EQUIVALENT, end of period	$	1,205		$	1,922
Supplemental disclosure of cash flow information:
Cash paid during period for interest	$	197		$	264
Cash paid during period for taxes	$	-		$	-

See accompanying notes to the unaudited condensed consolidated financial statements

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ZAP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2013

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

ZAP was incorporated in California in September 1994 (together with its subsidiaries, “the Company,” or “ZAP”). ZAP markets advanced transportation, including alternative energy and fuel efficient automobiles, motorcycles, bicycles, scooters, personal watercraft, hovercraft, neighborhood electric vehicles and commercial vehicles. The Company’s business strategy has been to develop, acquire and commercialize electric vehicles and electric vehicle power systems, which the Company believes have fundamental practical and environmental advantages over available internal combustion modes of transportation that can be produced commercially on an economically competitive basis. In pursuit of a manufacturing plant and a partner with an existing product line, a distribution and customer support network in China and experience in vehicle manufacturing, ZAP acquired a majority of the outstanding equity in Zhejiang Jonway Automobile Co., Ltd. (“Jonway”).

On January 21, 2011, the Company completed the acquisition of 51% of the equity shares of Jonway for a total purchase price of $31.75 million consisting of approximately $29 million in cash and 8 million shares of ZAP common stock valued at $2.7 million.  The Company believes that the acquisition will allow it to expand its electric vehicle (“EV”) business and distribution network around the world, give it access to the rapidly growing Chinese market for electric vehicles and have competitive production capacity in an ISO 9000 certified manufacturing facility with the capacity and resources to support production of ZAP’s electric vehicles and new product line of mini vans and mini SUVs.

Jonway is a limited liability company incorporated in Sanmen County, Zhejiang Province of the People’s Republic of China (“the PRC”) on April 28, 2004 by Jonway Group Co., Ltd. (“Jonway Group”). Jonway Group is under the control of three individuals, Wang Huaiyi, Alex Wang (the son of Wang Huaiyi) and Wang Xiao Ying (the daughter of Wang Huaiyi and all three individuals collectively referred to as the “Wang Family”).

Jonway’s approved scope of business operations includes the production and sale of vehicle spare parts, and the sale of UFO licensed SUV vehicles.  The principal activities of Jonway are the production and sale of automobile spare parts and the production and distribution of SUVs in China using the consigned UFO license from an affiliate of Jonway Group.

With the completion of the acquisition of a majority interest in Jonway, the combined companies’ new product lines include the A380 SUV EV and the minivan EV. Both products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles. Since the acquisition, the companies have been working on developing the joint product line, marketing and sales plans for the 2013 EV product lines.

Jonway received certification of the EV production line by the Chinese electric vehicle authorities, which occurred in February 2013. Meanwhile; the engineering teams from both companies are undertaking extensive testing of the A380 SUV EV at Jonway Auto and ZAP Hangzhou EV research and development center.

8

Our target is to deliver the EV A380 SUV and EV minivan in the first half of 2013, with the purpose of obtaining the Chinese central government electric vehicle incentives of up to RMB 60,000 or over $9,510 per vehicle.  ZAP intends to use the existing manufacturing plant from Jonway that is being upgraded for the production of the electric vehicles and utilizing the existing Jonway models to gain economy of scale and reduce molding investment costs. ZAP also intends to leverage Jonway’s distribution and customer support centers in China to support the sales and marketing of its new EV product line. In the meantime, Jonway auto established its two wholly-owned subsidiaries, namely, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd focusing on the vehicle leasing business in Taizhou.

ZAP plans to focus on developing new international markets such as Brazil, South Africa, Russia and some of the Central America countries such as Costa Rica, Ecuador and Mexico. These countries are looking for affordable gasoline and electric SUVs and minivans with a competitive price and qualities.

 BASIS OF PRESENTATION

The accompanying consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles, ZAP Stores and ZAP Hong Kong for the three months ended March 31, 2013 and 2012 and are prepared in accordance with United States (“U.S.”) generally accepted accounting principals (“GAAP”).  In these financial statements, “subsidiaries” are companies that are over 50% controlled, the financial statements of which are consolidated with those of the Company.  Significant intercompany transactions and balances are eliminated in consolidation; profits from intercompany sales, are also eliminated; non –controlling interests are included in equity.  We account for our 37.5% interest in the ZAP Hangzhou Joint Venture using the equity method of accounting.  

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2013 and 2012 may not be indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period.  These unaudited condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the “SEC”) on April 16, 2013 (our “10-K”).

LIQUIDITY AND RESOURCES

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in securities, and our operating and capital expenditure commitments.  Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. Our principal sources of liquidity consist of our existing cash on hand and bank facilities from China-based banks for Jonway Auto.

In March 2012, Jonway was approved up to an aggregate of $0.8 million of credit line from a Sanmen local Bank.  As of December 31, 2012, this credit line was fully used.  The credit line was repaid and expired in March 2013.

In May 2012, we were approved up to an aggregate of $ 23.8 million of credit line from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway.   When drawn down, the credit line will be secured by land and buildings on this land owned by Jonway and guaranteed by Jonway Group. Under the above credit line in November 2012, Jonway borrowed one year short-term loans in the aggregate amount of approximately $7.2 million. The annual interest rate is 6.60%, and the loans are due in November 2013. We have also drawn $5.7 million in the form of notes payable as of March 31, 2013. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in May, 2013.  As of March 31, 2013, the unused credit line of $10.9 million has not been used. The credit line expires in May 2013.

9

In December 2012, we were approved up to an aggregate of $4.0 million on a credit line from Taizhou Bank. This credit line was guaranteed by related parties. In December 2012 and February 2013, we borrowed two short-term loans under this credit line aggregating a total amount of $1.6 million. The annual interest rates are 8.06% and 8.46% respectively, and the loans are due in June and July, 2013, respectively. The remaining credit line was used in the form of notes payable. As of March 31, 2013, the credit line was fully used. The credit line expires in December 2013.

In December 2012, we were approved up to an aggregate of $8.9 million for a credit line from Everbright Bank. As of March 31, 2013, $9.4 million was drawn down as notes payable (Jonway’s deposit of $4.7 million of restricted cash for note payable) as the bank allows up to $500,000 to be overdrawn on the credit line. The credit line expires in December 2013.

As of March 31, 2013, Jonway had $13.6 million in short term bank loans outstanding, which are borrowed from the above stated China-based banks with interest rates ranging from 6.60% to 8.46% per annum and expires at various times through December 2013.

Jonway intends to utilize the credit lines to expand its electric vehicle business as well as other future vehicle models.  This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. These credit lines will also be used to support the company’s expansion plans, with emphasis on its electric vehicle production line facilities in China. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through May 20, 2014 in the event that we require additional liquidity. In addition, CEVC would likely extend the convertible note which is due August 2013, and in the event that CEVC decides to call on the repayment, the repayment would likely be paid in full or in part in Jonway Auto shares or ZAP shares unless there is a breach by the Company on the covenant of the convertible note.

We will require additional capital to expand our current operations and support on-going operating losses until we can reach a larger sales volume in order to absorb operating overhead costs.  In particular, we require additional capital to expand our presence across the world, to continue development of our electric vehicle business, to continue strengthening our dealer network and after-sale service centers and expanding our market initiatives.  We also require financing the investment for the continued roll-out of new products and to add qualified sales and professional staff to execute on our business plan and pursue our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias, the electric and other fuel efficient vehicles.

We intend to fund our long term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both.  Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments.  

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company.  The complaint was filed in the U.S. District Court for the District of Columbia as United States v. ZAP; Civil Action No. 13-646.  The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966.  The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration (“NHTSA”) about the vehicle recalls; and was uncooperative and evasive with NHTSA.  The Company has discontinued the sale of the Zebra vehicles after these 2008 models.  The 2008 Zebra vehicles were manufactured by a company called, Fula, based in Shandong Province, China, that ZAP had imported from.

10

The complaint seeks relief, which amount other things, would impose penalties of $6000 to $7000 for each violation.  Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.  This legal proceeding is subject to many uncertainties, and the outcome of this complaint is not predictable with assurance.  The extent of our financial exposure to this matter is difficult to estimate at this time.  However, the negative outcome of this complaint could adversely affect the Company’s liquidity and resources.

NOTE 2- SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration of Credit Risk

The Company’s operations are all carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with one high credit quality financial institution. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

11

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway’s facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway’s facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company’s business, financial condition and results of operations.

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

- Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

- Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. 

- Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company’s customary shipping terms are FOB shipping point.

- Collectability is reasonably assured.  The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-based compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the “Black-Scholes model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

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Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, Accounting for Uncertainty in Income Taxes defines uncertainty in income taxes and the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

United States federal, state and local income tax returns prior to 2009 are not subject to examination by tax authority.

 Foreign Currency Translation

The Company and its wholly owned subsidiary/investments, maintain their accounting records in United States Dollars (“US$”) whereas Jonway Auto maintains its accounting records in the currency of Renminbi (“RMB”), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto’s principal country of operations is the PRC.  The financial position and results of our operations are determined using RMB, the local currency, as the functional currency.  The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period.  Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.  The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.  Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.  Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder’s equity as “Accumulated Other Comprehensive Income.”

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting.  The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

13

	March 31, 2013   December 31, 2012
Balance sheet items, except for share capital, additional	$ 1=RMB 6.26660     $1=RMB 6.3090
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.27690   $1=RMB 6. 3079
and cash flows for the periods

 Loss per Share

Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share.

Cash and cash equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the company and are comprised of investments having maturities of three months or less when purchased.  The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway’s banks.  To issue these bank acceptance notes to Jonway’s suppliers, the banks require a deposit of 50% or 100% of the full amount of such notes which are payable within 6 months from issuance.  Upon the maturity date, restricted funds will be used to settle the bank acceptance notes.  The restricted cash as shown in the consolidated balance sheets is strictly used by Jonway Auto which is based in China against the bank notes provided by the various Chinese banks that are providing the credit facilities or loans.  The credit facilities and loans are used primarily to fund working capital and support the operating losses incurred by Jonway Auto.

Fair value of financial instruments

 The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. Accounting standards establish a three level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair values. For certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The three levels of inputs are defined as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management’s best estimate of fair value.

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 The Company records certain assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States. Generally assets are measured at fair value on a nonrecurring basis as a result of impairment changes. Fair value was estimated based on discounted cash flow. Assets measured at fair value on a nonrecurring basis for the period ended March 31, 2013 are summarized below (in thousands):

		December 31, 2012
Assets		Level 1	Level 2	Level 3		Fair Value Measurements
Long-lived assets- 3-door SUV mold	(1)			$	2,560	$	2,560

(1) Included in “Property, plant and equipment, net” on the face of condensed consolidated balance sheets. The original carrying value was $5.12 million. The Company recognized impairment charges of $2.56 million (included in “impairment loss of long-lived assets” on the face of consolidated statements of operations and comprehensive loss) for the year December 31, 2012. These charges were related to the impairment in the 3-door SUV mold equipment used in the Jonway Auto segment   (See Note 2-Accounting for long-lived assets).

The Company believes the reported carrying amounts of its current assets and current liabilities approximate fair value, based upon the short-term nature of these accounts. The fair value of the Company’s investment in joint ventures and its receivable from related parties are impracticable to determine.

Accounts Receivable and Notes Receivable

Accounts and note receivable consist mainly of receivables from our established dealer network.  A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit-related losses to date.   The allowance for doubtful accounts was $80,000 and $201,000 at March 31, 2013 and December 31, 2012, respectively

Inventories

Most of the inventory on the balance sheet consisting of $9,619 million is in Jonway Auto in China, ZAP’s Inventories of approximately half a million out of the total consist primarily of vehicles, both gas and electric, parts and supplies, and finished goods and are carried at the lesser of lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company’s products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

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As of March 31, 2013, ZAP has reserved $545,908 of its vehicle inventory that is held by Steve Schneider on River Road property that was being leased by ZAP from former ZAP Co-CEO and current ZAP Director. Steven Schneider. Mr. Schneider took this inventory without ZAP authorization before and after an illegal and failed attempt to take control of ZAP.  He refuses to release the inventory until a lawsuit he has filed against the Company is heard by the courts.  During the attempted takeover, $116,090 was diverted to a bank account set up by a former employee and board directors.  To date, these funds have not been recovered.

Property and equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements which are almost all in Jonway Auto in China.  ZAP does not own any property or any significant amount of equipment in the U.S. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset's estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized. Estimated useful lives are as follows:

Machinery and equipment	5-10 years (Jonway 10 years)
Computer equipment and software	3-5 years
Office furniture and equipment	5 years
Vehicles	5 years
Leasehold improvements	10 years or life of lease,
	whichever is shorter
Building and improvements	20-30 years (Jonway 20 years)

 Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and can not be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years.  The government grants individuals and companies the right to use parcels of land for specified periods of time.  These land use rights are sometimes referred to informally as “ownership”.  Land use rights are stated at cost less accumulated amortization.  Amortization is provided over the respective useful lives, using the straight –line method.  Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

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Long-lived assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value. There are no impairment losses of long-lived assets for the periods ended March 31, 2013 and $2.6 million of impairment loss for the year ended December 31, 2012, respectively.

Intangible Assets-Finite

Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 2 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

Goodwill and Intangible Assets – Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually.  Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles.  The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year.  The Company performs its annual impairment test in the fourth quarter of each year.   Calculating the fair value of the reporting units requires significant estimates and assumptions by management.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Product warranty costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall. The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required. 

Jonway provides a 2-year or 60,000 kilometer warranty for its SUV products. Jonway records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

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Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders’ equity that are not reflected in the consolidated statements of operations. The Company’s comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments. 

Risks and Uncertainties

A substantial portion of the company’s operations are located in the PRC.  Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.  The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange.  The company’s results may be adversely affected by interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Recent Accounting Pronouncements

In March 2013, the FASB issued ASU 2013-05 Topic 830 – Foreign Currency Matters (“ASU 2013-05”).  ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, ASU 2013-05 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity.  ASU 2013-02 becomes effective for the company prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013.  The Company does not expect the adoption of this guidance to have a material effect on the Company’s consolidated financial statements.

In April 2013,the FASB has issued Accounting Standards Update (ASU) No. 2013-4, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is fixed at the Reporting Date.  ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP.  The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among it co-obligors and any additional amount the reporting entity expects to pay on behalf of it co-obligors.  The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.  The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed consolidated financial position and results from operations.

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NOTE 3– INVENTORIES, NET

Inventories are summarized as follows (in thousands):

	March 31,  2013		December 31, 2012
Work in Process	$	1,423	$	2,155
Parts and supplies		4,906		4,178
Finished goods		5,551		7,144
		11,880		13,477
Less - inventory reserve		(2,261)		(2,325)
Inventories, net	$	9,619	$	11,152

 Changes in the Company’s inventory reserve are as follows (in thousands): 

	March 31,  2013
Balance  opening period	$	2,326
Current provision for Jonway Auto		-
Current provision for inventory ZAP-net		(65)
Balance end of period	$	2,261

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NOTE 4 - Property, plant and equipment, net

Property, plant and equipment, are summarized as follows (in thousands):

	March 31, 2013		December 31, 2012
Buildings and improvements	$	20,816	$	20,725
Machinery and equipment		48,580		48,081
Office furniture and equipment		501		499
Leasehold improvements		37		37
Vehicles		875		872
		70,809		70,214
Less: accumulated depreciation
and amortization		(18,288)		(16,857)
	$	52,521	$	53,357

Four pieces of land were acquired from the acquisition of Jonway auto in 2011, all land in the People’s Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years.  Intangible assets consist of the following:

	March 31,  2013			December 31,  2012
Land use right	$	10,250		$	10,217
Software		106			97
		10,356			10,314
Less: accumulated amortization		(570	)		(547	)
	$	9,786		$	9,767

As of March 31, 2013, estimated future amortization expense for intangibles assets, subject to amortization, is as follows (in thousands): 

	Amortization
Year	Expense
2013	$	182
2014		242
2015		242
2016		242
2017		242
Thereafter		8,636
	$	9,786

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Depreciation and amortization expense of property, plant and equipment, as well as land use rights and software was approximately $1,535,000 and $1,135,000 for the three months ended March 31, 2013 and 2012, respectively.

 5- INTANGIBLE ASSETS, NET & GOODWILL

 The goodwill and intangible assets at March 31, 2013 and 2012 are summarized as follows:

			Net Book		Amortization and cumulated translation adjustments (“CTA”)			Net Book
	Useful Life		Value		for the three months ended			Value
	(In Years)		12/31/2012		March 31, 2013			03/31/2013
Patents and Trademarks		7	$	52	$	(5	)	$	47
Customer Relationships		8.5		600		(9	)		591
Developed Technology		7		1,567		(58	)		1,509
In Process Technology	(a)			183		-			183
Trade name	(a)			2,169		--			2,169
Intangibles			$	4,571	$	(72	)	$	4,499
Goodwill			$	324	$	-		$	324

(a) The in process technology and trade name have been determined to have an indefinite life.

Amortization expense was approximately $70,000 for the three months ended March 31, 2013 and 2012, respectively.

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As of March 31, 2013, estimated future amortization expense for intangibles assets, subject to amortization, is as follows (in thousands): 

Year	Amortization Expense
2013	$	318
2014		424
2015		407
2016		402
2017		402
Thereafter		160
	$	2,113

NOTE 6 - DISTRIBUTION AGREEMENTS

Distribution agreements are presented below (in thousands):

	March 31, 2013		December 31, 2012
Better World Products-related party	$	2,160	$	2,160
Jonway Products		14,400		14,400
		16,560		16,560
Less amortization		(5,641)		(5,281)
	$	10,919	$	11,279

Amortization expense related to these distribution agreements for the periods ended March 31, 2013 and 2012 were $360,000 and $540,000, respectively.  Amortization is based over the term of the agreements. The estimated future amortization expense, as follows (in millions):

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Year ended December 31,
2013	$	1,080
2014		1,440
2015		1,440
2016		1,440
2017		1,440
Thereafter		4,079
Total	$	10,919

Distribution Agreement with Better World, Ltd

On January 15, 2010, ZAP entered into a Stock Purchase Agreement with a related party, Better World, Ltd., a British Virgin Islands company, whereby the Company issued 6 million shares of its common stock valued at $2.16 million in exchange for an agreement on terms relating to rights to the distribution of Better World products, such as charging stations for electric vehicles both in the U.S. and internationally. Priscilla Lu, Chairman of the Board of Directors of ZAP, is also General Partner of Better World, Ltd.

Distribution Agreement with Goldenstone Worldwide Limited for Jonway Products

On October 10, 2010, ZAP entered into an International Distribution with Goldenstone Worldwide Limited as the distributor of Jonway products such as gas SUV’s and gas and electric motor scooters, both in the U. S. and internationally. In connection with the distribution agreement the Company also issued 30 million shares of ZAP common stock valued at $14.4 million. The Jonway Group had previously granted exclusive worldwide distribution of Jonway products to Goldenstone Worldwide Limited. ZAP acquired a 51% equity interest in Jonway Auto but this equity interest did not include the worldwide distribution rights for Jonway Products. Therefore it was necessary for ZAP to acquire distribution rights for Jonway Products.

NOTE 7– INVESTMENT IN JOINT VENTURES

On December 11, 2009, the Company entered into a Joint Venture Agreement to establish a new US-China company incorporated as ZAP Hangzhou to design and manufacture electric vehicle and infrastructure technology with Holley Group, the parent company of a global supplier of electric power meters and Better World. Priscilla Lu, Ph.D., who is the current Chairman of the Board of ZAP, is also a director and General Partner of Cathaya Capital, which is a shareholder of Better World. In January of 2011, Holley Group’s interest in ZAP Hangzhou was purchased by Jonway Group. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Jonway Group owns 25% of the equity shares of ZAP Hangzhou. The joint venture partners have also funded the initial capital requirements under the agreement for a total of $3 million, of which ZAP’s portion is $1.1 million.

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In November 2011, Jonway and ZAP Hangzhou jointly set up Shanghai Zapple Electric Vehicle Technologies Co., Ltd. (Shanghai Zapple) with registered capital of RMB 20 million. Jonway and ZAP Hangzhou each own 50% of the equity share of Shanghai Zapple. Jonway injected RMB 5 million into this joint venture and ZAP Hangzhou injected RMB 3 million. Shanghai Zapple’s approved scope of business includes: technical advice, technical development, technical services, technology transfer regarding electric vehicle technology, auto technology, energy technology, material science and technology, sale of commercial vehicle and vehicle for nine seats or more, auto parts, auto supplies, lubricant, mechanical equipment and accessories, business management consulting, industrial investment, exhibition services, business marketing planning, car rental (shall not be engaged in financial leasing), import and export of goods and technologies.

The carrying amount of the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011		554			736			1,290
Less: investment loss		(123	)		(280	)		(403	)
CTA		6			5			11
Balance as of December 31, 2012	$	437		$	461		$	898
Less: Investment loss		(24	)		(461	)		(485	)
CTA		4			--			4
Balance as of March 31, 2013		417			--			417

The Company recorded a loss of $24,000 and $51,000 in ZAP Hangzhou for the three months ended March 31, 2013 and 2012, respectively. Due to the suspension of Shanghai Zapple operations, the company recorded a loss of $461,000 and $68,000 in Shanghai Zapple for the periods ended March 31, 2013 and 2012 respectively. These losses relate to investment in non-consolidated joint ventures accounted for under the equity method of accounting because the company does not have control.

Summarized financial information of Hangzhou ZAP and Shanghai Zapple are as follows: (in thousands)

	March 31, 2013		December 31, 2012
Shanghai Zapple
Total assets	$	--	$	1,472
Total liabilities		--		867
Revenue		--		-
Hangzhou ZAP
Total assets		1,476		1,682
Total liabilities		33		118
Revenue	$	81	$	922

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NOTE 8 –LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit

In March, 2012, Jonway was approved up to an aggregate of $0.8 million of credit line from a Sanmen local Bank. As of December 31, 2012, this credit line was fully used.  The credit line was repaid and expired on March 31, 2013.

In May 2012, we were approved up to an aggregate of $ 23.8 million of credit line from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. When drawn down, the credit line will be secured by land and buildings on this land owned by Jonway and guaranteed by Jonway Group. Under the above credit line in November 2012, Jonway borrowed one year short-term loans in the aggregate amount of approximately $7.2 million. The annual interest rate is 6.60%, and the loans are due in November 2013. We have also drawn $5.7 million in the form of notes payable by March 31, 2013. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in May 2013.  As of March 31, 2013, the unused credit line of $10.9 million has not been used. The credit line expires in May 2013.

In December 2012, Jonway was approved up to an aggregate of $4.0 million on a credit line from Taizhou Bank. This credit line was guaranteed by related parties. At March 31, 2013, this credit line was fully used in form of short term bank loans $1.6 million and notes payable of $5.1 million (Jonway deposited $2.7 million as restricted cash as collateral against the notes payable in order for the bank to release $5.1 million of notes payable) . The credit line expires in December 2013.

In December 2012, Jonway was approved up to an aggregate of $8.9 million of credit line from Everbright Bank. As of March 31, 2013, $9.4 million was drawn as notes payable (Jonway deposited $4.7 million as restricted cash as collateral against the notes payable in order for the bank to release the additional amounts above the $8.9 million of credit line.  The credit line expires in December 2013.

Short term debt

Under the above mentioned credit line of $23.8 million granted by CITIC, Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.6 million which was drawn down on May 25, 2012. The annual interest rate is 8.05% and was repaid in December, 2012. In November 2012, Jonway borrowed another one year short-term loan in the aggregate amount of approximately $7.2 million from CITIC under the credit line. The annual interest rate is 6.60%, and expires in November 2013.  The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012 in which land use right and a building at a total carrying amount of $5.9 million has been pledged as security for this loan.

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In December 2012, Jonway entered into two short-term loans with Taizhou Bank for the aggregating amount of $1.6 million. The annual interest rates are 8.06% and 8.46% respectively, and the loans are due in February and June 2013, respectively. The loans are guaranteed by Jonway Group, shareholder Huaiyi Wang and his two families.  In February 2013, $0.8 million was renewed and expires in July 2013.

During 2012, Jonway in total borrowed $12.6 million and repaid $9.3 million. The weighted average annual interest rate was 6.51%. In the first quarter of 2013, Jonway borrowed $5.6 million and repaid $0.8 million. The weighted average annual interest rate was 6.90%.

In January and February, 2013, Jonway borrowed $1.4 million and $3.3 million, respectively, from Industrial and Commercial Bank of China (ICBC). $1.4 million expires in January 2014 and $3.4 million expires at various dates during 2013 from May 2013 through December 31, 2013. The annual interest rate is 6.90%. The loans are guaranteed by shareholders Alex Wang and Huaiyi Wang, with collateral pledged by land use right and buildings at a carrying amount of approximately $3.7 million.

In May 2013, approximately $1.1 million of short term debt to ICBC was repaid.

	March 31, 2012		December 31, 2012
Loan from CITIC bank	$	7,181		7,133
Loan from ICBC		4,787		--
Loan from Taizhou Bank		1,588		1,585
Loan from Pay-Ins Prem		14		36
		13,570		8,754

As of March 31, 2013, the Company has bank acceptance notes payable in the amount of $22.7 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of six (6) months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these banks, in order to ensure future credit availability. As of March 31, 2013, the restricted cash for the notes was $16.1 million.

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Bank acceptance notes – 3 to 6 month term for each note issued

	March 31, 2013		December 31, 2012
a) Bank acceptance notes payable to China Everbright bank	$	9,415		6,334
b) Bank acceptance notes payable to Taizhou bank		5,189		4,627
c) Bank acceptance notes payable to CITIC bank		5,708		5,608
d) Bank acceptance notes payable to ICBC		2,378		--
e) Bank acceptance notes payable to Yinzuo bank		--		1,268
f) Bank acceptance notes payable to Shanghai Pudong development bank		--		677
		22,690		18,513

a. Notes payable to China Everbright bank have various maturity dates from June, 2013 to September 2013. The notes payable are guaranteed by land use right and a building at a total carrying value of $1.5 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. During 2013, a total amount of 7.2 million was renewed.

b. Notes payable to Taizhou bank have various maturity dates from April 2013 to August, 2013. The Company is required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In 2013, a total of $2.5 million was renewed.

c. Notes payable to CITIC bank have various maturity dates from May, 2013 to September, 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

d. Notes payable to ICBC will be due in July 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

e. Notes payable to Yinzuo bank include 21 bank acceptance notes which expired in March 2013. The Company was required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.

f. On March 13, 2012 the Company and Shanghai Pudong Development Bank signed bank acceptance note agreement for $ 676,811. This bank note facility was issued to Jonway Auto’s suppliers and secured by a letter of credit, valued at $ 676,811, of which Jonway Auto was a beneficiary. The bank acceptance notes expired on March 13, 2013.

In April and May, 2013, approximately $7.1 million of notes payable matured.  In April 2013, approximately $4.4 million of notes payable were issued and are due in October 2013.  The Company is required to maintain cash deposits at 50% or 100% of the notes payable with the bank.

SENIOR CONVERTIBLE DEBT - China Electric Vehicle Corporation (“CEVC”) Note

On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the “Agreement”) with China Electric Vehicle Corporation (“CEVC”), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., a Cayman Islands exempted limited partnership (“Cathaya”).  Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

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Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the “Note”) in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the “Warrant”) exercisable for two years for the purchase up to 20 million shares of the Company’s Common Stock at $0.50 per share, as amended  (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company’s assets other than those assets specifically excluded from the lien created by the Security Agreement.

The Note which initially was scheduled to mature on February 12, 2012 but was extended to August 12, 2013 according to the representation letter dated March 21, 2012 from CEVC. On March 22, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment adjusted the rate at which the note would convert into shares of ZAP Common Stock or shares of capital stock of Zheijiang Jonway Automobile, Co. Ltd. held by ZAP. In addition, the warrant issued in connection with the CEVC note was amended to change the terms of conversion and to extend the maturity date until February 12, 2014. The interest accrued through the maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $20.7 million with a new maturity date of August 12, 2013. The note accrues interest at a rate per annum of 8% effective from February 12, 2012.

The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.,

Since the value of the common stock into which the above-mentioned note is converted is greater than the proceeds for such issuance, a beneficial conversion feature totaling $19 million was recorded. During 2011, a total of $16.9 million in amortization was recorded and charged to interest expense and the remaining balance of $2.1 million of the discount was offset against the Company’s equity account due to the note extension to August 12, 2013.

NOTE 9-STOCK-BASED COMPENSATION

Services performed and other transactions settled in the company’s common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable, than the fair value of the consideration received.

We have stock compensation plans for employees and directors. We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock-based compensation is accounted for as an equity instrument.

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-	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding December 31, 2012		28,691	$	0.44		5.0		--
Options granted under the plan		--						--
Options forfeited and expired		--						--
Options exercisable and Outstanding at March 31, 2013		28,691	$	0.44		4.75		--

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of our stock exceeded the exercise price of the options at March 31, 2013 for those options for which the quoted market price was in excess of the exercise price (“in-the-money­ options”). There were no options in the money at March 31, 2013.

As of March 31, 2013, total compensation cost of unvested employee stock options is $85,000.  This cost is expected to be recognized through September 30, 2016. We recorded no income tax benefits for stock-based compensation expense arrangements for the three months ended March 31, 2013, as we have cumulative operating losses.

NOTE 10 – SEGMENT REPORTING

Operating Segments

Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“ASC 280”), establishes standards for the way public business enterprises report information about operating segments. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

  In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, Consumer Product and Car Outlet.  The Jonway Vehicles segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway’s EV A380SUV and EV minivan in 2013. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters.  Our Car Outlet segment represents operation of a retail car outlet that sells pre-owned conventional vehicles and advanced technology vehicles.  These segments are strategic business units that offer different services.  They are managed separately because each business requires different resources and strategies.  The Company’s chief operating decision making group, which is comprised of the Chief Executive Officer and the senior executives of each of ZAP’s strategic segments, regularly evaluate the financial information about these segments in deciding how to allocate resources and in assessing performance.  

     The performance of each segment is measured based on its profit or loss from operations to ZAP before income taxes. Segment results are summarized as follows (in thousands):

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	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended March 31, 2013:
Net sales	$	14,235		$	123		$	--		$	7		$	14,365
Gross profit (loss)	$	649		$	50		$	--		$	51		$	750
Depreciation and amortization	$	947		$	657		$	--		$	1		$	1,605
Net profit (loss)	$	(2,358	)	$	(1,605	)	$	--		$	48		$	(3,915	)
Total assets	$	94,227		$	22,884		$	179		$	377		$	117,667
For the three months ended March 31, 2012
Net sales	$	11,989		$	114		$	73		$	5		$	12,181
Gross profit (loss)	$	723		$	28		$	7		$	(56	)	$	702
Depreciation and amortization	$	1,244		$	546		$	2		$	7		$	1,799
Net loss	$	(2,191	)	$	(2,119	)	$	(34	)	$	(168	)	$	(4,512	)
Total assets	$	88,749		$	27,261		$	447		$	250		$	116,707

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.

Customer information

Approximately 99% or $14.2 million of our revenues for the three months ended March 31, 2013 are from sales in China. Jonway Auto distributes its products to an established network of over 100 factory level dealers in China with some contributing more than 10% of our consolidated revenue

NOTE 11– RELATED PARTIES

Due from (to) related parties

Amounts due from related parties are principally for advances in the normal course of business for parts and supplies used in manufacturing.

Amount due from related parties are as follows:
	March 31, 2013		December 31, 2012
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,750		$	3,093
Jonway Group		989			--
Shanghai Zapple		128			--
Total	$	2,867		$	3,093
Amount due to related parties are follows:
	March 31, 2013		December 31, 2012
Jonway Group	$	--		$	122
Zhejiang UFO Automobile		--			--
Jonway Motor Cycle		--			181
Taizhou Huadu		--			431
Shanghai Zapple		--			36
Hangzhou Zapple		147			147
Betterworld		91			152
Cathaya Capital		152			90
Total	$	390		$	1,159

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Promissory notes and Down Payment on Convertible Note from Jonway Group

On December 11, 2011, ZAP entered into a Down Payment Convertible Note agreement with Jonway Group pursuant to which ZAP may borrow $3 million for the production of seventy-five Alias electric vehicles to be delivered and sold in 2012.  The unpaid principal amount of the note bears interest at a rate per annum equal to 8%, calculated on the basis of a 365 day year and the actual number of days lapsed.  Upon the completion of selling seventy-five Alias vehicles, ZAP will repay the unpaid principal, together with any then unpaid and accrued interest, on or before December 31, 2012.  Repayment shall be made at the option of Jonway Group in the form of either cash or ZAP’s Common Stock priced as of the date the principal was deposited into Jonway’s bank account on behalf of ZAP. As of March 31, 2013, no advance has been made to ZAP from Jonway Group.

Transactions with Jonway Group

Jonway Group is considered a related party as the Wang Family, one of the shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of the plastic spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. For the three months ended March 31, 2013 and 2012 Jonway made purchases from Jonway Group of $316,000 and $337,000.

Jonway Agreement with Zhejiang UFO

Based on a contract by and among Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates:

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO. Jonway has obligation to pay such fees based on the number of SUVs assembled by Zhejiang UFO.  As of March 31, 2013, $1,750,000 was accrued and recorded as due from related party.

NOTE 12-INCOME TAXES

The Company is subject to United States of America (“US”) and People’s Republic of China (“PRC”) profit tax.

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 US

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the year. The applicable income tax rate for the Company for the three months ended March 31, 2013 and 2012 was 35%, respectively.  No tax benefit has been realized since a valuation allowance has offset the deferred tax asset resulting from the net operating losses.

PRC

Effective January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions. As such, the Company’s subsidiary in PRC is subject to an enterprise income tax rate of 25%.

No provisions for income taxes have been made as the Company has no taxable income for the periods.  $13,000 of tax benefits were recognized due to the change in the deferred tax assets.

Loss before income taxes consisted of:

	For Three Months Ended
	March 31
	2013			2012
US	$	(1,557	)	$	(2,321	)
PRC		(2,371	)		(2,229	)
	$	(3,928	)	$	(4,550	)
Benefit for income taxes consisted of:

	For Three Months Ended
	March 31.
	2013		2012
Current provision:
US	$	--	$	--
PRC		--		--
Total current		-		--
Deferred benefit
US		-		-
PRC		13		38
Total Deferred benefit		13		38
Total benefit for income taxes	$	13	$	38

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NOTE 13– LITIGATION

1)           On January 11, 2013, Cathaya Capital, L.P., a ZAP shareholder (“Cathaya”), and Priscilla Lu, Chairman of the ZAP Board of Directors (“Lu”) (collectively “Plaintiffs”), filed a lawsuit in the Superior Court of California, County of Los Angeles, styled Cathaya Capital, L.P. et al. v.  ZAP, et al., Case No. BC499106 (the “Cathaya Lawsuit”).  By the Cathaya Lawsuit, Plaintiffs, derivatively on behalf of the nominally-named defendant ZAP, asserted claims for breach of fiduciary duty and conversion against the following three members of the ZAP Board of Directors:  Mark Abdou, Steven Schneider and Wang Gang a/k/a Alex Wang (the “Minority Board Member Defendants”).  In addition, Plaintiffs, derivatively on ZAP’s behalf, sought declaratory and injunctive relief against the Minority Board Member Defendants for their alleged tortuous misconduct and breaches of fiduciary duty.  Plaintiffs also asserted causes of action on their own behalf pursuant to California Corporations Code sections 304 and 709, for a judgment as to the rightful composition of the Board and to remove the Minority Board Member Defendants from the Board.

On February 19, 2013, the Minority Board Member Defendants filed a Cross-Complaint in the Cathaya Lawsuit (the “Cross-Complaint”).  In the Cross-Complaint, the Minority Board Member Defendants joined in bringing a cross-claim for a determination as to the rightful composition of the Board pursuant to California Corporations Code section 709.  (On March 14, 2013, Wang Gang a/k/a Alex Wang filed a Request for Dismissal withdrawing as a cross-complainant.)  The Cross-Complaint also asserts the following purported claims:  (1) Steven Schneider’s claim for “breach of promise” against Pricilla Lu based on an alleged August 2009 oral promise that ZAP would provide Steven Schneider with a more favorable employment contract; (2) Steven Schneider’s claim for “breach of agreement to negotiate in good faith” against ZAP, based on ZAP’s alleged failure in August 2009 to negotiate an employment contract with Steven Schneider; (3) Mark Abdou’s claim against ZAP alleging that ZAP breached a Director Agreement with Mark Abdou (“Abdou Director Agreement”) by failing to pay all compensation allegedly due there under; (4) Mark Abdou’s claim for “breach of the covenant of good faith and fair dealing” against ZAP based on the alleged breaches of the Abdou Director Agreement; and (5) a claim against Lu for tortuous interference with contractual relations (although the Cross-Complaint is unclear as to who is bringing the tortuous interference claim against Lu and the factual basis for the claim).  The Cross-Complaint seeks an unspecified amount of damages and other consideration.

On March 22, 2013, Plaintiffs/Cross-Defendants’ Cathaya and Lu filed a Demurrer to the Cross-Complaint, which is set for hearing on June 27, 2013.  ZAP’s response to the Cross-Complaint is not yet due.  ZAP intends to vigorously defend the Cross-Complaint.

The Court has already heard and determined the parties’ respective claims seeking a determination as to the proper composition of the ZAP Board of Directors.  On February 2, 2013, the Court ruled on Plaintiffs’ application seeking such determination pursuant to California Corporations Code section 709, ruling that the purported actions taken by the Minority Board Member Defendants at a purported December 31, 2012 meeting of the ZAP Board of Directors, including the appointment of Luo Hua Lian and Juan Gao to fill alleged vacancies on the Board, were null and void.  On March 1, 2013, the Court denied the Minority Board Member Defendants’ application pursuant to California Corporations Code section 709, which had sought an order declaring that Co Nguyen and Aileen Kao were not validly appointed to the ZAP Board of Directors in October 2012.

As a result of the Court’s rulings on the parties’ respective applications under California Corporations Code section 709, the Board is comprised of the directors that were members of the Board prior to the purported December 31, 2012 Board meeting, except for the previously announced resignation of Alex Wang at a meeting of the Board held on January 20, 2013, and the appointment of Wang Huai Yi as a member of the Board at the same meeting to fill the vacancy created by Alex Wang’s resignation.

There is no trial date set regarding the parties’ remaining claims.

2.            A derivative lawsuit filed by Cathaya Capital against Steve Schneider, Mark Abdou, and Alex Wang is awaiting court hearing date to be announced and is being taken over by the Company, which is currently pursuing Steve Schneider to return inventory and assets that were removed from the Company’s warehouse, as well as cash that was redirected and thus far not yet recovered by the Company, to a new bank account that was not authorized by the Board of Directors of ZAP’s.

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3.           Integrity Automotive, LLC and Randall Waldman v. ZAP Motor Manufacturing,

Inc., et al., Complaint filed on March 2, 2010, Case No. 10 CI-01383 in the Jefferson Circuit Court, Division Ten, of the Commonwealth of Kentucky. The Complaint alleges causes of action for civil conspiracy, breach of fiduciary duties, conversion, and breach of contract and that the Defendants conspired against plaintiffs in connection with certain business transactions in Kentucky. Although no specific monetary demand is included, the Complaint seeks punitive damages, actual damages, and interest. All of the defendants answered and cross-complained on March 29, 2010, and discovery was served on plaintiffs requiring responses in early May 2010. The Company intends to defend itself vigorously in this matter and has learned that plaintiff Randall Waldman was arrested in Kentucky in late April, 2010, and charged with felonious criminal conduct. The Court indicated an intent to dismiss the case for failure to prosecute in early 2012 but the plaintiffs retained new counsel and successfully opposed the dismissal. There has been no activity in the case that we are aware of in the past several months.

4            Rainbow Cycle & Marine & Siloam Springs Cycle, v. Voltage Vehicles, Arkansas Motor Vehicle Commission, Case No. 10-008. On April 1, 2010, Rainbow Cycle & Marine & Siloam Spring Cycle (the "Dealer"), an automobile dealer in the State of Arkansas, submitted a complaint to the Arkansas Motor Vehicle Commission (the "Commission") regarding 6 Xebra vehicles purchased from the Company in 2008, each at the price of $8,750.00. The Dealer requested that the Commission order the Company to refund all monies paid by the Dealer to the Company for the vehicles, to pay all transportation costs, and in addition to assess penalties and interest charges against the Company in an unspecified amount. The Commission issued a Notice of Hearing on August 11, 2010, setting a hearing for September 15, 2010 on the Dealer's Complaint. The Company responded with a Motion to Dismiss, which the Commission set for hearing on December 15, 2010 and at the same time continued the hearing on the Dealer's Complaint to the same date. After the hearing, the Commission ruled that the Company was required to refund the Dealer's purchase price for the vehicles and to pay for transportation of the vehicles off of the Dealer's premises. In response, the Company's local counsel filed a Petition for Judicial Review on March 1, 2011 in the Circuit Court of Pulaski County, State of Arkansas, challenging the Commission's decision. On November 11, 2011, the Circuit Court upheld the decision of the Commission, and the Company filed a notice of Appeal on December 16, 201 1, and the Arkansas Supreme Court reversed and remanded to the Commission for further proceedings on October 11, 2012. There has been no subsequent activity in this matter since that time of which we are aware. In the event of a final, unfavorable outcome, the potential loss to the Company associated with the refund would be approximately $57,000.

5            Long v. ZAP, et al., Case No. SW-250380, filed in the Superior Court of the State of California, County of Sonoma on September 20, 201 1. The Complaint alleges causes of action for injunctive relief and damages for breach of contract, breach of the implied covenant of good faith and fair dealing, failure to pay wages, wrongful termination, fraud, defamation, and illegal recording in violation of privacy rights. Included as defendants are ZAP, Jonway, Steve Schneider, William Hartman, and Priscilla Lu. The Company entered into a settlement agreement with the plaintiff in early September, 2012 and made an installment payment on September 21, 2012.  The case against the Company was settled in December, 2012.  The suit against individual defendants, Schneider, Hartman, and Lu is on-going.

6            Alvarez Lincoln - Mercury, Inc. vs. ZAP, Voltage Vehicles, Liuzhou Wuling

Motors Co., Ltd., Pricilla Lu, and Steve Schneider, Complaint filed on May 30, 2012, in the Superior Court of the State of California, County of Riverside, Case No. RIC 1208152. The Complaint alleges causes of action for breach of written contract; money had and received fraud by intentional misrepresentation, fraud by concealment, and fraud by negligent misrepresentation. The allegations contained in the Complaint include a claim that plaintiff believed it was purchasing 2010 model year vehicles but that in fact the vehicles were model year 2009. No trial date has as yet been set, and the parties continue to negotiate a possible resolution. The Company intends to vigorously defend itself in this matter if plaintiff refuses to enter into a reasonable settlement.

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7.           Susan Sher v. ZAP, Case No. SCV-253158, filed on February 1, 2013, in the Superior Court of California, County of Sonoma. The Complaint alleges causes of action for breach of implied warranty and reimbursement under the California "Lemon Law" statutes. The Complaint contains allegations that ZAP failed to repair a 2008 Xebra purchased by plaintiff in violation of the statutes and an implied warranty of merchantability. The parties are discussing settlement, but the Company is prepared to defend itself vigorously if plaintiff refuses to enter into a reasonable settlement.

8.           A letter was received in May 2012 from a shareholder regarding various prior transactions of the Company which the Company is working to address and clarify.  A tolling agreement was reached between the Company and shareholder on October 22, 2012 under which ZAP, through its legal counsel shall provide a written summary of the actions taken during the preceding month with respect to the matters regarding the prior transactions in question by the shareholder.  These transactions include, but are not limited to, a) ZAP, Jonway Group, Jonway Auto and Cathaya Capital shall each in all respects comply with their executory obligations with respect to the continued funding of ZAP, b) resolve the litigation regarding  the former contracted employee, c) use reasonable efforts to defend, compromise and/or settle any pending and future litigations and ZAP shall use all reasonable efforts to cause all officers, directors and such other individuals who are or were employees, agents or representatives of ZAP to fully cooperate in the defense  of future arbitrations or litigations.  This agreement is binding through December 31, 2015.

Other Regulatory Compliance Matters

           ZAP has filed with the National Highway Transportation Safety Agency (NHTSA) that it is in non compliance with Department of Transportation (DOT) requirements potential hazard may exist because the Model -Year 2008 XEBRA sedan and pickup does not stop in the required distance at 30 miles per hour and the master cylinder does not have separate brake fluid reservoirs with proper labeling and other miscellaneous non compliance issues.  A public hearing was held in Washington DC on October 9, 2012 that allowed the DOT to take comments from the public and from their inside officers for consideration in their determination of whether ZAP has made a reasonable effort to 1) notify dealers and purchasers of the brake recall and 2) provide a remedy to the public to correct the brake problem.    There were recommendations at the public hearing  from DOT staff testifying at the hearing that ZAP should be subject to penalties and be required to repurchase the MY 2008 Xebra vehicles.   ZAP has contracted with an independent testing facility to test the remedy that ZAP believes will correct the stopping distance problem, the duel brake fluid reservoir with correct labeling and other miscellaneous non compliance issues.

On November 16, 2012 ZAP received notification from the Office of Chief Counsel of the National Highway Traffic Safety Administration (“NHTSA”) containing Findings, Conclusions, and Order on ZAP’s Failure to Reasonably Meet its Recall Remedy and Notification Requirements (“Order”), dated November 13, 2012, related to the recall of ZAP’s model year 2008 Xebra, an electric three-wheeled motor vehicle with an enclosed sedan or truck body style.

NHTSA determined that ZAP has not reasonably met its recall remedy and notification requirements and was ordered to remedy the model year 2008 Xebra by, among other things, refunding the purchase price, less reasonable allowance for depreciation, providing notice of this refund remedy to model year 2008 Xebra owners, purchasers, and dealers, and picking up and disposing of each recalled vehicle at ZAP’s sole expense. NHTSA determined that the average market price of a model year 2008 Xebra as of October 12, 2012 to be $3,100.  The order stated a total of 691 model year 2008 Xebra vehicles are subject to this remedy.  ZAP’s internal records indicate that 691 vehicles were imported into the U.S. by ZAP, of which 627 were shipped to customers located in the U.S.

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ZAP was ordered to respond to NHTSA and to take certain other actions by November 26, 2012.  ZAP is in on-going discussions with NHTSA on this matter.

 The Company has accrued for estimated expenses related to above claims.

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court of the District of Columbia as United States v. Zap; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration (“NHTSA”) about the vehicle recalls; and was uncooperative and evasive with NHTSA.  The Company has discontinued the sale of the Zebra vehicles after these 2008 models.  The 2008 Zebra vehicles were manufactured by a company called, Fulu, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which among other things, would impose penalties of $6,000 to $7,000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel. The Company hopes to resolve this matter in a mutually satisfactory manner

 NOTE 14 – COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee.  Maximum potential payments under guarantees total $2.7 million at March 31, 2013. The guarantee expires in November 2013. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

NOTE 15 – SUBSEQUENT EVENTS

Legal Proceedings

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court of the District of Columbia as United States v. Zap; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration (“NHTSA”) about the vehicle recalls; and was uncooperative and evasive with NHTSA.  The Company has discontinued the sale of the Zebra vehicles after these 2008 models.  The 2008 Zebra vehicles were manufactured by a company called, Fulu, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which among other things, would impose penalties of $6,000 to $7,000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This quarterly report including the following management’s discussion and analysis, and other reports filed by the registrant from time to time with the securities and exchange commission (collectively the “filings”) contain forward-looking statements which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances. you can generally identify forward-looking statements through words and phrases such as “seek”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “budget”, “project”, “may be”, “may continue”, “may likely result”, and similar expressions. When reading any forward-looking statement you should remain mindful that all forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of our company, and are subject to risks, uncertainties, assumptions and other factors relating to our industry and results of operations, including but not limited to the following factors:

· our ability to establish, maintain and strengthen our brand;

· our ability to successfully integrate acquired subsidiaries, particularly Jonway, into our company and business;

· our ability to maintain effective disclosure controls and procedures;

· our limited operating history, particularly of ZAP and Jonway on a consolidated basis;

· whether the alternative energy and gas-efficient vehicle market for our electric products continues to grow and, if it does, the pace at which it may grow;

· our ability to attract and retain the personnel qualified to implement our growth strategies;

· our ability to obtain approval from government authorities for our products;

· our ability to protect the patents on our proprietary technology;

· our ability to fund our short-term and long-term financing needs;

· our ability to compete against large competitors in a rapidly changing market for electric and conventional fuel  vehicles;

· changes in our business plan and corporate strategies; and

· Other risks and uncertainties discussed in greater detail in various sections of this report, or set forth in part I, Item 1A of our Annual Report on Form 10-K under the heading “Risk Factors”.

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 Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Each forward-looking statement should be read in context with, and with an understanding of, the various other disclosures concerning our company and our business made in our filings. You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statement contained in this report to reflect new events or circumstances unless and to the extent required by applicable law.

In this quarterly report on Form 10-Q the term “ZAP” refers to ZAP, the term “Jonway” refers to Zhejiang Jonway Automobile Co. Ltd., of which ZAP owns 51% of the equity shares, “ZAP Jonway” refers to both ZAP and Jonway on a consolidated basis, and “we,” “us” and “our” refer to ZAP or ZAP Jonway, as the context indicates.

Recent Developments

In May 2012, Jonway Auto established two wholly owned subsidiaries, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd. focusing on the vehicle leasing business in Taizhou, China. B ZAP believes these subsidiaries will facilitate its business diversification and new business model development.

ZAP operates its business in four reportable segments:  Jonway Conventional Vehicles, Advanced Technology, Consumer Product and Car Outlet. We are in the process of liquidating the assets of the Car Outlet.  These segments are strategic business units that offer different services.  They are managed separately because each business requires different resources and strategies.   The Jonway Conventional Vehicle Segment represents the manufacture and sales of vehicles through distributors in China and abroad. The Advanced Technology segment represents the sales activity of advanced technology vehicles to ZAP dealers throughout the U.S.  The Consumer Product segment represents sales of our ZAPPY 3, a three wheeled electric scooter, and the overall corporate expenses of ZAP. Many of these expenses relate to the overall development of our core business, electric consumer products.  

 The board of ZAP has demanded that CO-CEO Alex Wang resolve the conflict of interest in Jonway Group’s purchase of the Aptera assets and the formation of the new company Aptera (same name as the product) in the USA.  Alex Wang has agreed to transfer the asset ownership of Aptera to Jonway Auto, but this currently remains unresolved.

Results of Operations

The following table sets forth, as a percentage of net sales, certain items included in ZAP’s Statements of Operations (see Financial Statements and Notes) for the periods indicated:

	Three Months Ended March 31,
	2013			2012
Statements of Operations Data:
Net sales		100.0	%		100.0	%
Cost of sales		(94.8)			(94.2)
Operating expenses		(24.8)			(40.0)
Loss from operations		(19.6)			(36.4)
Net loss attributable to ZAP		(19.2)			(27.9)

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These results of operations that have been derived from our financial statements, which were prepared in accordance with accounting principles generally accepted in the United States of America and that include the results of operations of Jonway since the date of ZAP’s acquisition of 51% of the equity shares of Jonway on January 21, 2011.

Quarter Ended March 31, 2013 Compared to Quarter Ended March 31, 2012

                           Net sales for the quarter ended March 31, 2013 were $14.4 million as compared to $12.2 million for the quarter ended March 31, 2012.

Jonway Auto’s revenue for the quarter ended March 31, 2013 increased by $2.2 million from $12.0 million for the quarter ended March 31, 2012 compared to $14.2 million in first quarter ended March 31, 2013. The sales volume increased due to  the following factors: (i) more SUV models were launched into market by China-based auto makers, which intensified the competition, (ii) Although Jonway ‘s upgraded A380, which was launched  into the market to compete with these competitors, the resulting sales volume ramped up in this 1st  quarter did not reach the expected volume (iii) increasing oil prices in China affected customer demand and (iv) China’s overall economic condition worsened during the quarter (the GDP increase rate for this quarter compared to same quarter in 2012 was 7.7%, which is unexpected low).

Our first quarter sales of our Advanced Technology segment sales increased by $2,000 from $5,000 for the three months ended March 31, 2013 to $7,000 for the three months ended March 31, 2013.  The increase is primarily due to a sale of our LSV Xebra XL.  This is still far below our projections due to the tight United States credit market and general economic conditions negatively impacting our dealer sales in 2012. We also began the transition of moving our operations from the U.S. to China and switching suppliers for advanced technology vehicles from outside contract manufacturers to our auto manufacturing plant in China.

Our retail car lot experienced a decrease of $73,000 in sales for the first quarter from $73,000 in 2012 to $0.00 in 2013. We have closed the retail car lot and are currently settling our assets and inventory with Mr. Schneider, who is holding these assets until his claims are settled.

In our Consumer Product segment first quarter sales increased from $114,000 in 2012 to $123,000 in 2013.  The increase is primarily due to a bulk sale to a major customer of our ZAPPY 3 electric scooters.

Gross profit increased by $48,000 from a gross profit of $702,000 for the three months ended March 31, 2012 to a gross profit of $750,000 for the three months ended March 31, 2013.  Our margins declined from 5.8% to 5.2%.

Jonway Auto’s gross profit decreased by $74,000 from $723,000 in the first quarter of 2012 to $649,000 for the first quarter ended March 31, 2013. The decrease was primarily due to a new price reduction program for the existing SUV models, which resulted in lower gross profit contributions in this first quarter, while the Company launched upgraded models.  In order to deal with increasing competition in the SUV market in China, Jonway Auto initiated its price reduction program to end users throughout the three months ended March 31, 2013.

Advanced Technology vehicles gross profit increased $107,000 from a gross loss of $56,000 for the period ended March 31, 2012 to a gross profit of $51,000 for the period ended March 31, 2013.  The increase was primarily due to increase in the amount of reserves included for inventory sold in 2013 that was fully reserved.

Our retail car lot gross profits decreased by $7,000 from $7,000 for the quarter ended March 31, 2012 to $0 for the quarter ended March 31, 2013. We have closed the retail car lot.

39

The Consumer Products segment experienced an increase in gross profit in the first quarter from $28,000 in 2012 to a profit of $50,000 in 2013. The increase was due to an increase in sales volume of our ZAPPY 3 Pro Flex.

Sales and marketing expenses decreased $367,000 from $2.1 million for the three month period ended March 31, 2012 to $1.7 million for the three months ended March 31, 2013.  As a percentage of sales the expense decreased from 17.3% for the quarter ended March 31, 2012 to 10.0% for the quarter ended March 31, 2013 due to greater sales volume compared to the same period in 2012 and an overall decrease in sales and marketing expenses.

General and administrative expenses decreased by 679,000 from $2.1 million for the quarter ended March 31, 2012 to $1.4 million in 2013. The decrease was primarily a result of reductions in ZAP US operations due to the following: (i) less salaries and wages due to transferring of various functions to Jonway China, and (ii) less professional fees in 2013 as compared to the prior year in which we experienced non –recurring professional fees in connection with the Jonway acquisition in January, 2011.

Research and development expenses decreased by $129,000 from $279,000 for the first quarter ended March 31, 2012 to $ 150,000 for the first quarter ended March 31, 2013. The decrease was primarily due to fewer projects scheduled for the first quarter of 2013. In the prior year’s quarter ended March 31, 2012, we incurred Research and Development fees relating to refinement of the automatic transmission for Jonway’s three and five door sport utility vehicles.

Interest expense increased by $336,000 from $486,000 in first quarter 2012 to $822,000 in the first quarter of 2013. In 2013, the amortization of the previous year’s discount on the convertible debt was significantly higher and we are incurring interest on our notes and short term borrowings.

Other income decreased by $48,000 from $235,000 for the period ended March 31, 2012 to $187,000 for the period ended March 31, 2013. This amount mainly represents a decrease in the sales of metal scrap, increase of interest income, and the reversal of selling expenses booked in 2012 in Jonway.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in related party securities, and our operating and capital expenditure commitments.  Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.  At March 31, 2013, we believe that we will have sufficient liquidity required to conduct operations through May 15, 2014.

In January 2011, ZAP issued $19 million of convertible debt to China Electric Vehicle Corporation (“CEVC”) to make a partial payment in connection with the Jonway Acquisition.  On March 31, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment changed the terms of the note requiring adjustment of the conversion price of note for dilutive issuances by ZAP. In addition, the warrant issued in connection with the CEVC note was amended to change the terms of conversion and to extend the maturity date until February 12, 2014. The interest accrued through the maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $20.7 million with a new maturity date of August 12, 2013.

At present, the Company will require additional capital to expand our current operations.  In particular, we require additional capital to expand our presence into Asia, to continue development of our methodology for converting gasoline vehicles to electric and to continue building our dealer network and expanding our market initiatives.  We also require financing to purchase consumer inventory for the continued roll-out of new products to add qualified sales and professional staff to execute our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias and other fuel efficient vehicles.

40

We intend to fund our long term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both.  Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments.  However, we may not be able to obtain this additional financing on terms acceptable to us or at all.

In the first three months of 2013, net cash used for operating activities was $4.7 million.  Cash used in the first three months of 2013 was comprised of the net loss incurred for the three months of $3.9 million plus net non-cash expenses of $2.8 million and the net increase of $3.9 million in operating assets and liabilities. In the first three months of 2012, net cash used for operating activities was $1.9 million.

Investing activities used cash of $335,000 and $597,000 in the first three months ended March 31, 2013 and 2012, respectively. Investing activities were used for the purchase of equipment for the period ended March 31, 2013 and 2012, respectively.

Financing activities for the three months ended March 31, 2013 provided cash of $4.7 million compared with financing activities that used cash of $1.4 million in 2012. During the first three months of 2013, we provided cash of $18.9 million in short term loan and notes and 18.7 million from proceeds from related parties.  We used cash of $10.0 million in repayment of notes and short term borrowings and $10.0 for repayment of related party borrowings.  Restricted cash changed by $4.2 million for the three months ended March 31, 2013.

The Company had cash of $1.2 million at March 31, 2013 as compared to $1.7 million at December 31, 2012. The Company had working capital deficits of $53.1 million and $54.3 million for the periods ended March 31, 2013 and December 31, 2012 respectively.

In the event that we require additional liquidity, one of our shareholders, Jonway Group, has agreed to provide the necessary support to meet our financial obligations throughMay 2014.

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company.  The complaint was filed in the U.S. District Court for the District of Columbia as United States v. ZAP; Civil Action No. 13-646.  The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966.  The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration (“NHTSA”) about the vehicle recalls; and was uncooperative and evasive with NHTSA.  The Company has discontinued the sale of the Zebra vehicles after these 2008 models.  The 2008 Zebra vehicles were manufactured by a company called, Fula, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which amount other things, would impose penalties of $6000 to $7000 for each violation.  Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.  This legal proceeding is subject to many uncertainties, and the outcome of this complaint is not predictable with assurance.  The extent of our financial exposure to this matter is difficult to estimate at this time.  However, the negative outcome of this complaint could adversely affect the Company’s liquidity and resources.

41

Critical Accounting Policies and Use of Estimates

Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with United States generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates

Stock Based Compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the “Black-Scholes model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts when management estimates collectability to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience.

Inventories

Inventories consist primarily of vehicles, both gas and electric, parts and supplies, and finished goods and are carried at the lower of cost (first-in, first-out basis) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company’s products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

42

Off-Balance Sheet Arrangements

None.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide disclosure pursuant to this Item 3.

Item 4.  Controls and Procedures

As discussed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2012, we identified a lack of sufficient control in the area of technical competency in review and approval of financial reporting processes. This control weakness allowed for reconciliations, reports and other documents to be insufficiently reviewed prior to being approved by management and audit adjustments to be identified by our auditors as part of their year-end audit work. This material weakness resulted in errors in the recording of non-routine and complex accounting transactions in the preparation of our annual consolidated financial statements and disclosures. The Company is considering utilizing outside accounting experts to assist us in accounting for future complex transactions.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Co- Chief Executive Officers and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rules 13a-15(f). Based on this evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective as of the end of the period covered by this report.

 Changes in internal control over financial reporting

No significant changes were made in our internal control over financial reporting during the Company’s first quarter of 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

   PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company.  The complaint was filed in the U.S. District Court for the District of Columbia as United States v. ZAP; Civil Action No. 13-646.  The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966.  The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration (“NHTSA”) about the vehicle recalls; and was uncooperative and evasive with NHTSA.  The Company has discontinued the sale of the Zebra vehicles after these 2008 models.  The 2008 Zebra vehicles were manufactured by a company called, Fula, based in Shandong Province, China, that ZAP had imported from.

43

The complaint seeks relief, which amount other things, would impose penalties of $6000 to $7000 for each violation.  Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.  This legal proceeding is subject to many uncertainties, and the outcome of this complaint is not predictable with assurance.  The extent of our financial exposure to this matter is difficult to estimate at this time.  

Item 1A. Risk Factors

There have been no material changes to the Company’s risk factors which are included and described in the annual report on Form 10-K for the fiscal year ended December 31, 2012.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.  We could be facing fines from the Department of Justice for non compliance in the repurchase of the MY 2008 ZEBRA sedans and PKs.  These fines could total as much as $17,350,000.

Item 1B. Unresolved Staff Comments

None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.  Defaults upon Senior Securities

None

Item 4.  Mine safety disclosure

Not Applicable

Item 5.  Other Information

None

Item 6.  Exhibits

(b) Exhibits.

44

Exhibit Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14/15d-14 of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Principal Financial Officer pursuant to 13a-14/15d-14 of the Exchange Act as  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T.

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

Furnished herewith, XBLR (Extensive Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

45

                                                                  SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 15, 2013	By:	/s/ Alex Wang
		Name: Alex Wang
		Title: Co-Chief Executive Officer (Co-Principal Executive Officer).

Dated: May 15, 2013	By:	/s/ Charles Schillings
		Name: Charles Schillings
		Title: Co-Chief Executive Officer  (Co-Principal Executive Officer).

Dated: May 15, 2013	By:	/s/ Benjamin Zhu
		Name: Benjamin Zhu
		Title: Chief Financial Officer (Principal Financial Officer)

 46

EX-31.1

EXHIBIT 31.1

 CERTIFICATION

 Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: I, Alex Wang certify that:

1. I have reviewed this 10-Q of ZAP.

 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

 4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

s/ Alex Wang

Alex Wang

Title: Chief Executive Officer (Co-Principal Executive Officer)

Date: May 15, 2013

EX-31.2

EXHIBIT 31.2

CERTIFICATION

 Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: I, Charles Schillings, certify that:

1. I have reviewed this 10-Q of ZAP.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

 4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ Charles Schillings

Charles Schillings

Title: Co-Chief Executive Officer

Date: May 15, 2013

EX-31.3

EXHIBIT 31.3

CERTIFICATION

 Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: I, Benjamin Zhu, certify that:

1. I have reviewed this 10-Q of ZAP.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

 4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ Benjamin Zhu

Benjamin Zhu

Title: Chief Financial Officer (Principal Financial and Accounting Officer)

Date: May 15, 2013

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ZAP (the "Company") on Form 10-Q for the period ending March 31, 2013 as filed with the U.S. Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  May 15, 2013 By: /s/ Alex Wang

Alex Wang

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated:  May 15, 2013 By: /s/ Charles Schillings

Charles Schillings

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated: May 15, 2013 By: /s/ Benjamin Zhu

Benjamin Zhu

Chief Financial Officer

(Principal Financial Officer)

XML

PROPERTY, PLANT AND EQUIPMENT, NET (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Depreciation and amortization	$ 1,605	$ 1,799
Property, plant and equipment [Member]
Pieces of land acquired	4
Useful Life	50 years
Depreciation and amortization	$ 1,535	$ 1,135

XML

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule Of Short-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Citic Bank [Member]	Dec. 31, 2012 Citic Bank [Member]	Mar. 31, 2013 ICBC [Member]	Dec. 31, 2012 ICBC [Member]	Mar. 31, 2013 Taizhou Bank [Member]	Feb. 28, 2013 Taizhou Bank [Member]	Dec. 31, 2012 Taizhou Bank [Member]	Mar. 31, 2013 Insurance Premiums [Member]	Dec. 31, 2012 Insurance Premiums [Member]
Short-term Debt [Line Items]
Short term debt	$ 4,400	$ 13,570	$ 8,754	$ 7,181	$ 7,133	$ 4,787		$ 1,588	$ 1,600	$ 1,585	$ 14	$ 36

XML

DISTRIBUTION AGREEMENTS (Schedule of Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Estimated future amortization expense:
Intangible assets, net	$ 9,786	$ 9,767
Distribution Agreements [Member]
Estimated future amortization expense:
2013	1,080,000
2014	1,440,000
2015	1,440,000
2016	1,440,000
2017	1,440,000
Thereafter	4,079,000
Intangible assets, net	$ 10,919,000

XML

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule Of Bank Acceptance Notes) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Short-term Debt [Line Items]
Bank acceptance notes payable	$ 22,690	$ 18,513
China Everbright Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	9,415	6,334
Taizhou Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	5,189	4,627
CITIC Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	5,708	5,608
ICBC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	2,378
Yinzuo Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable		1,268
Shanghai Pudong Development Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable		$ 677

XML

DISTRIBUTION AGREEMENTS (Narrative) (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended			12 Months Ended		3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011	Dec. 31, 2010 Better World [Member]	Dec. 31, 2010 Goldenston Worldwide Limited [Member]	Mar. 31, 2013 Distribution Agreements [Member]	Mar. 31, 2012 Distribution Agreements [Member]
Distribution Agreements [Line Items]
Depreciation and amortization	$ 1,605,000	$ 1,799,000				$ 360,000	$ 540,000
Purchase of fixed assets and intangibles, shares				6	30
Purchase of fixed assets and intangibles				$ 2,160,000	$ 14,400,000
Percentage acquired in Jonway Auto			51.00%		51.00%

XML

ORGANIZATION AND BASIS OF PRESENTATION (Basis Of Presentation) (Details) Share data in Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 USD ($)	Dec. 31, 2011 CNY	Mar. 31, 2013 Zap Hangzhou [Member]
Business Acquisition [Line Items]
Date of acquisition	Jan. 21, 2011	Jan. 21, 2011
Percentage of equity shares acquired	51.00%	51.00%
Cash paid in acquisition	$ 29,000,000
Shares of common stock paid in acquisition	8	8
Value of shares of common stock paid in acquisition	2,700,000
Electric vehicle incentive, per vehicle	$ 9,510	60,000
Ownership percentage			37.50%

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STOCK-BASED COMPENSATION (Schedule Of Option Activity) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Number of Shares
Outstanding, beginning balance	28,691
Options granted under the plan
Options forfeited and expired
Outstanding, ending balance	28,691	28,691
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.44
Options granted under the plan
Options forfeited and expired
Outstanding, ending balance	$ 0.44	$ 0.44
Weighted Average Remaining Contractual Term	4 years 9 months	5 years
Aggregate Intrinsic Value

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INTANGIBLE ASSETS, NET AND GOODWILL (Tables)

3 Months Ended

Mar. 31, 2013

INTANGIBLE ASSETS, NET & GOODWILL [Abstract]

Schedule of Goodwill and Other Intangible Assets

			Net Book		Amortization and cumulated translation adjustments ("CTA")			Net Book
	Useful Life		Value		for the three months ended			Value
	(In Years)		12/31/2012		March 31, 2013			03/31/2013
Patents and Trademarks		7	$	52	$	(5	)	$	47
Customer Relationships		8.5		600		(9	)		591
Developed Technology		7		1,567		(58	)		1,509
In Process Technology	(a)			183		-			183
Trade name	(a)			2,169		--			2,169
Intangibles			$	4,571	$	(72	)	$	4,499
Goodwill			$	324	$	-		$	324

(a) The in process technology and trade name have been determined to have an indefinite life.

Schedule of Estimated Future Amortization Expense Related to Other Intangible Assets

Year	Amortization Expense
2013	$	318
2014		424
2015		407
2016		402
2017		402
Thereafter		160
	$	2,113

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INVESTMENT IN JOINT VENTURES (Schedule of Carrying Amounts) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Schedule of Equity Method Investments [Line Items]
Beginning balance	$ 898	$ 1,290	$ 1,290
Less: investment loss	(485)	(119)	(403)
CTA	4		11
Ending balance	417		898
Shanghai Zapple [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balance	461	736	736
Less: investment loss	461	68	280
CTA			5
Ending balance			461
ZAP Hangzhou [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balance	437	554	554
Less: investment loss	24	51	123
CTA	4		6
Ending balance	$ 417		$ 437

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PROPERTY, PLANT AND EQUIPMENT, NET (Schedule of Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Estimated future amortization expense:
Intangible assets, net	$ 9,786	$ 9,767
Land Use Rights and Software [Member]
Estimated future amortization expense:
2013	182
2014	242
2015	242
2016	242
2017	242
Thereafter	8,636
Intangible assets, net	$ 9,786

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INVENTORIES, NET (Schedule of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
INVENTORIES, NET [Abstract]
Work in Process	$ 1,423	$ 2,155
Parts and supplies	4,906	4,178
Finished goods	5,551	7,144
Inventories	11,880	13,477
Less - inventory reserve	(2,261)	(2,325)
Inventories, net	$ 9,619	$ 11,152

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Narrative) (Details) (USD $)	3 Months Ended				3 Months Ended											12 Months Ended							0 Months Ended	1 Months Ended				3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Apr. 30, 2013	Dec. 31, 2012	Mar. 31, 2013 Sanmen Local Bank [Member]	Dec. 31, 2012 Sanmen Local Bank [Member]	Mar. 31, 2012 Sanmen Local Bank [Member]	Mar. 31, 2013 Sanmen Branch Of CITIC Bank [Member]	Nov. 30, 2012 Sanmen Branch Of CITIC Bank [Member]	May 31, 2012 Sanmen Branch Of CITIC Bank [Member]	Mar. 31, 2013 Taizhou Bank [Member]	Feb. 28, 2013 Taizhou Bank [Member]	Dec. 31, 2012 Taizhou Bank [Member]	Mar. 31, 2013 China Everbright Bank [Member]	Dec. 31, 2012 China Everbright Bank [Member]	Dec. 31, 2012 CITIC Bank [Member]	Mar. 31, 2013 CITIC Bank [Member]	May 31, 2012 CITIC Bank [Member]	Mar. 31, 2013 Yinzuo Bank [Member]	Dec. 31, 2012 Yinzuo Bank [Member]	Mar. 31, 2013 Shanghai Pudong Development Bank [Member]	Dec. 31, 2012 Shanghai Pudong Development Bank [Member]	May 15, 2013 Industrial and Commercial Bank of China [Member]	Feb. 28, 2013 Industrial and Commercial Bank of China [Member]	Jan. 31, 2013 Industrial and Commercial Bank of China [Member]	Mar. 31, 2013 Industrial and Commercial Bank of China [Member]	Dec. 31, 2012 Industrial and Commercial Bank of China [Member]	Mar. 31, 2013 Jonway Group [Member]	Dec. 31, 2012 Jonway Group [Member]	Feb. 28, 2013 Jonway Group [Member] Taizhou Bank [Member]	Dec. 31, 2012 Jonway Group [Member] Taizhou Bank [Member]	Mar. 31, 2013 Jonway Group [Member] China Everbright Bank [Member]	Dec. 31, 2012 Minimum [Member] Taizhou Bank [Member]	Mar. 31, 2013 Minimum [Member] Jonway Group [Member]	Dec. 31, 2012 Maximum [Member] Taizhou Bank [Member]	Mar. 31, 2013 Maximum [Member] Jonway Group [Member]
Short-term Debt [Line Items]
Line of credit, borrowing capacity							$ 800,000	$ 10,900,000		$ 23,800,000			$ 4,000,000		$ 8,900,000			$ 23,800,000			$ 676,811
Line of credit, amount outstanding						800,000		5,700,000			4,000,000			9,400,000				1,600,000										13,600,000		800,000	1,600,000	4,700,000
Amount borrowed																								3,300,000	1,400,000			5,600,000	12,600,000
Line of credit, annual interest rate																								6.90%	6.90%			6.90%	6.51%
Line of credit, amount repaid					800,000											1,600,000							1,100,000					800,000	9,300,000
Short term loans	13,570,000		4,400,000	8,754,000					72,000		1,588,000	1,600,000	1,585,000			7,133,000	7,181,000				676,811,000					4,787,000
Payment of short term debt	817,000	852,000
Interest rate									6.60%			8.46%	8.06%					8.05%															8.06%	6.00%	8.46%	8.46%
Pledged assets														7,200		5,900,000										3,700,000
Bank acceptance notes payable	22,690,000			18,513,000							5,189,000		4,627,000	9,415,000	6,334,000	5,608,000	5,708,000			1,268,000		677,000				2,378,000
Required cash deposit	50.00%										50.00%			50.00%			100.00%		50.00%							100.00%
Restricted cash for notes payable	$ 16,100,000
Number of bank acceptance notes																			21

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Commitments And Contingencies [Line Items]
Potential payments under guarantee	$ 2,700

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RELATED PARTIES (Schedule Of Amount Due To/From Related Parties) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Amount due from related parties	$ 2,867	$ 3,093
Amount due to related parties	390	1,159
Zhejiang UFO [Member]
Related Party Transaction [Line Items]
Amount due from related parties	1,750	3,093
Jonway Group [Member]
Related Party Transaction [Line Items]
Amount due from related parties	989
Amount due to related parties		122
Zhejiang UFO Automobile [Member]
Related Party Transaction [Line Items]
Amount due to related parties
Jonway Motor Cycle [Member]
Related Party Transaction [Line Items]
Amount due to related parties		181
Taizhou Huadu [Member]
Related Party Transaction [Line Items]
Amount due to related parties		431
Shanghai Zapple [Member]
Related Party Transaction [Line Items]
Amount due from related parties	128
Amount due to related parties		36
Hangzhou Zapple [Member]
Related Party Transaction [Line Items]
Amount due to related parties	147	147
Better World [Member]
Related Party Transaction [Line Items]
Amount due to related parties	91	152
Cathaya Capital [Member]
Related Party Transaction [Line Items]
Amount due to related parties	$ 152	$ 90

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DISTRIBUTION AGREEMENTS (Schedule Of Distribution Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Distribution Agreements [Line Items]
Distribution agreements, gross	$ 16,560	$ 16,560
Less amortization	(5,641)	(5,281)
Distribution agreements, net	10,919	11,279
Zhejiang Jonway Automobile Co Ltd [Member]
Distribution Agreements [Line Items]
Distribution agreements, gross	14,400	14,400
Better World [Member]
Distribution Agreements [Line Items]
Distribution agreements, gross	$ 2,160	$ 2,160

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PROPERTY, PLANT AND EQUIPMENT, NET

3 Months Ended

Mar. 31, 2013

PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 4 - Property, plant and equipment, net

Property, plant and equipment, are summarized as follows (in thousands):

	March 31, 2013		December 31, 2012
Buildings and improvements	$	20,816	$	20,725
Machinery and equipment		48,580		48,081
Office furniture and equipment		501		499
Leasehold improvements		37		37
Vehicles		875		872
		70,809		70,214
Less: accumulated depreciation
and amortization		(18,288)		(16,857)
	$	52,521	$	53,357

Four pieces of land were acquired from the acquisition of Jonway auto in 2011, all land in the People's Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a "land use right" (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years. Intangible assets consist of the following:

	March 31, 2013			December 31, 2012
Land use right	$	10,250		$	10,217
Software		106			97
		10,356			10,314
Less: accumulated amortization		(570	)		(547	)
	$	9,786		$	9,767

As of March 31, 2013, estimated future amortization expense for intangibles assets, subject to amortization, is as follows (in thousands):

	Amortization
Year	Expense
2013	$	182
2014		242
2015		242
2016		242
2017		242
Thereafter		8,636
	$	9,786

Depreciation and amortization expense of property, plant and equipment, as well as land use rights and software was approximately $1,535,000 and $1,135,000 for the three months ended March 31, 2013 and 2012, respectively.

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RELATED PARTIES (Schedule Of Contract Rates) (Details) (Zhejiang UFO [Member], USD $)	3 Months Ended
	Mar. 31, 2013
The First 3,000 Vehicles [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,000
Contractual fee per vehicle	$ 44
Vehicles From 3,001 To 5,000 [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	30,000
Vehicles From 3,001 To 5,000 [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,001
Vehicles From 3,001 To 5,000 [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Vehicles Over 5,000 [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,001
Contractual fee per vehicle	$ 22

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INTANGIBLE ASSETS, NET AND GOODWILL (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Depreciation and amortization	$ 1,605	$ 1,799
Other intangible assets [Member]
Depreciation and amortization	$ 70	$ 70

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2013

STOCK-BASED COMPENSATION [Abstract]

Schedule of Option Activity

-	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding December 31, 2012		28,691	$	0.44		5.0		--
Options granted under the plan		--						--
Options forfeited and expired		--						--
Options exercisable and Outstanding at March 31, 2013		28,691	$	0.44		4.75		--

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Tables)

3 Months Ended

Mar. 31, 2013

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES [Abstract]

Schedule of Short-Term Debt

	March 31, 2012		December 31, 2012
Loan from CITIC bank	$	7,181		7,133
Loan from ICBC		4,787		--
Loan from Taizhou Bank		1,588		1,585
Loan from Pay-Ins Prem		14		36
		13,570		8,754

Schedule of Bank Acceptance Notes

	March 31, 2013		December 31, 2012
a) Bank acceptance notes payable to China Everbright bank	$	9,415		6,334
b) Bank acceptance notes payable to Taizhou bank		5,189		4,627
c) Bank acceptance notes payable to CITIC bank		5,708		5,608
d) Bank acceptance notes payable to ICBC		2,378		--
e) Bank acceptance notes payable to Yinzuo bank		--		1,268
f) Bank acceptance notes payable to Shanghai Pudong development bank		--		677
		22,690		18,513

a. Notes payable to China Everbright bank have various maturity dates from June, 2013 to September 2013. The notes payable are guaranteed by land use right and a building at a total carrying value of $1.5 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. During 2013, a total amount of 7.2 million was renewed.

b. Notes payable to Taizhou bank have various maturity dates from April 2013 to August, 2013. The Company is required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In 2013, a total of $2.5 million was renewed.

c. Notes payable to CITIC bank have various maturity dates from May, 2013 to September, 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

d. Notes payable to ICBC will be due in July 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

e. Notes payable to Yinzuo bank include 21 bank acceptance notes which expired in March 2013. The Company was required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.

f. On March 13, 2012 the Company and Shanghai Pudong Development Bank signed bank acceptance note agreement for $ 676,811. This bank note facility was issued to Jonway Auto's suppliers and secured by a letter of credit, valued at $ 676,811, of which Jonway Auto was a beneficiary. The bank acceptance notes expired on March 13, 2013.

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STOCK-BASED COMPENSATION (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
STOCK-BASED COMPENSATION [Abstract]
Unrecognized share-based compensation expense	$ 85,000

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INTANGIBLE ASSETS, NET AND GOODWILL (Summary Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Finite Assets, Net Book Value	$ 9,786		$ 9,767
Finite Assets, Amortization	(72)
Intangible Assets, Net Book Value	4,499		4,571
Goodwill	324		324
Patents and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	7 years
Finite Assets, Net Book Value	47		52
Finite Assets, Amortization	(5)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	8 years 6 months
Finite Assets, Net Book Value	591		600
Finite Assets, Amortization	(9)
Developments [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	7 years
Finite Assets, Net Book Value	1,509		1,567
Finite Assets, Amortization	(58)
In Process Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life		[1]
Indefinite Assets, Net Book Value	183		183
Trade name [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life		[1]
Indefinite Assets, Net Book Value	$ 2,169		$ 2,169

[1] The in process technology and trade name have been determined to have an indefinite life.

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2013

SEGMENT REPORTING [Abstract]

Schedule of Segment Results

	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended March 31, 2013:
Net sales	$	14,235		$	123		$	--		$	7		$	14,365
Gross profit (loss)	$	649		$	50		$	--		$	51		$	750
Depreciation and amortization	$	947		$	657		$	--		$	1		$	1,605
Net profit (loss)	$	(2,358	)	$	(1,605	)	$	--		$	48		$	(3,915	)
Total assets	$	94,227		$	22,884		$	179		$	377		$	117,667
For the three months ended March 31, 2012
Net sales	$	11,989		$	114		$	73		$	5		$	12,181
Gross profit (loss)	$	723		$	28		$	7		$	(56	)	$	702
Depreciation and amortization	$	1,244		$	546		$	2		$	7		$	1,799
Net loss	$	(2,191	)	$	(2,119	)	$	(34	)	$	(168	)	$	(4,512	)
Total assets	$	88,749		$	27,261		$	447		$	250		$	116,707

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RELATED PARTIES (Tables)

3 Months Ended

Mar. 31, 2013

RELATED PARTIES [Abstract]

Schedule of Amount Due To/From Related Parties

Amount due from related parties are as follows:
	March 31, 2013		December 31, 2012
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,750		$	3,093
Jonway Group		989			--
Shanghai Zapple		128			--
Total	$	2,867		$	3,093
Amount due to related parties are follows:
	March 31, 2013		December 31, 2012
Jonway Group	$	--		$	122
Zhejiang UFO Automobile		--			--
Jonway Motor Cycle		--			181
Taizhou Huadu		--			431
Shanghai Zapple		--			36
Hangzhou Zapple		147			147
Betterworld		91			152
Cathaya Capital		152			90
Total	$	390		$	1,159

Schedule of Contract Rates

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

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INVENTORIES, NET

3 Months Ended

Mar. 31, 2013

INVENTORIES, NET [Abstract]

INVENTORIES, NET

NOTE 3- INVENTORIES, NET

Inventories are summarized as follows (in thousands):

	March 31, 2013		December 31, 2012
Work in Process	$	1,423	$	2,155
Parts and supplies		4,906		4,178
Finished goods		5,551		7,144
		11,880		13,477
Less - inventory reserve		(2,261)		(2,325)
Inventories, net	$	9,619	$	11,152

Changes in the Company's inventory reserve are as follows (in thousands):

	March 31, 2013
Balance opening period	$	2,326
Current provision for Jonway Auto		-
Current provision for inventory ZAP-net		(65)
Balance end of period	$	2,261

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INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2013

Income Tax Contingency [Line Items]

Schedule of Income (Loss) before Provision for Income Taxes

	For Three Months Ended
	March 31
	2013			2012
US	$	(1,557	)	$	(2,321	)
PRC		(2,371	)		(2,229	)
	$	(3,928	)	$	(4,550	)

Schedule of Income Tax Provision (Benefit)

	For Three Months Ended
	March 31.
	2013		2012
Current provision:
US	$	--	$	--
PRC		--		--
Total current		-		--
Deferred benefit
US		-		-
PRC		13		38
Total Deferred benefit		13		38
Total benefit for income taxes	$	13	$	38

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PROPERTY, PLANT AND EQUIPMENT, NET (Schedule Of Property, Plant And Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 70,809	$ 70,214
Less: accumulated depreciation and amortization	(18,288)	(16,857)
Property, plant and equipment, net	52,521	53,357
Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	20,816	20,725
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	48,580	48,081
Office furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	501	499
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	37	37
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 875	$ 872

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Senior Convertible Debt) (Details) (USD $)	3 Months Ended			12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Convertible Debt [Member]	Dec. 31, 2011 Convertible Debt [Member]	Feb. 12, 2012 Convertible Debt [Member]	Jan. 12, 2011 Convertible Debt [Member]
Debt Instrument [Line Items]
Debt instrument, face amount					$ 20,700,000	$ 19,000,000
Outstanding options to purchase						20,000,000
Exercise price of options						0.50
Accrued interest					1,700,000
Interest rate					8.00%
Debt conversion, price per share			$ 0.003743
Debt conversion, shares issued			4,435
Beneficial conversion feature				19,000,000
Amortization of debt discount	391,000			16,900,000
Remaining debt discount				2,100,000
Interest expense				$ 16,900,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 1,205	$ 1,656
Restricted Cash	16,054	11,763
Notes receivable	714	947
Restricted Notes receivable		678
Accounts receivable	6,398	5,736
Inventories, net	9,619	11,152
Prepaid expenses and other current assets	2,084	502
Total current assets	36,074	32,434
Property, plant and equipment, net	52,521	53,357
Land use rights, net	9,786	9,767
Other assets:
Investment in joint ventures	417	898
Distribution fee for Jonway Products and Better Worlds Products	10,919	11,279
Intangible assets, net	4,499	4,571
Goodwill	324	324
Due from related party	2,867	3,093
Deposits and other assets	260	241
Total other assets	19,286	20,406
Total assets	117,667	115,964
Current liabilities:
Short term loans	13,570	8,754
Senior convertible debt	20,084	19,693
Accounts payable	21,677	22,386
Accrued liabilities	7,742	8,549
Notes payable	22,690	18,513
Advances from customers	2,066	3,782
Taxes payable	1,232	850
Due to related party	390	1,159
Other payables	2,688	3,102
Total current liabilities	92,139	86,788
Long term liabilities:
Warranty costs	205	229
Total liabilities	92,344	87,017
Commitments and contingencies
ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized; 302,518,002 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	229,870	229,785
Accumulated other comprehensive income	1,295	1,190
Accumulated deficit	(220,181)	(217,421)
Total ZAP shareholders' equity	10,984	13,554
Non-controlling interest	14,339	15,393
Total equity	25,323	28,947
Total liabilities and equity	$ 117,667	$ 115,964

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INTANGIBLE ASSETS, NET AND GOODWILL (Schedule of Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Estimated future amortization expense:
Intangible assets, net	$ 9,786	$ 9,767
Patents, Trademarks, Customer Relationships and Developed Technology [Member]
Estimated future amortization expense:
2013	318
2014	424
2015	407
2016	402
2017	402
Thereafter	160
Intangible assets, net	$ 2,113

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ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2013

ORGANIZATION AND BASIS OF PRESENTATION [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

ZAP was incorporated in California in September 1994 (together with its subsidiaries, "the Company," or "ZAP"). ZAP markets advanced transportation, including alternative energy and fuel efficient automobiles, motorcycles, bicycles, scooters, personal watercraft, hovercraft, neighborhood electric vehicles and commercial vehicles. The Company's business strategy has been to develop, acquire and commercialize electric vehicles and electric vehicle power systems, which the Company believes have fundamental practical and environmental advantages over available internal combustion modes of transportation that can be produced commercially on an economically competitive basis. In pursuit of a manufacturing plant and a partner with an existing product line, a distribution and customer support network in China and experience in vehicle manufacturing, ZAP acquired a majority of the outstanding equity in Zhejiang Jonway Automobile Co., Ltd. ("Jonway").

On January 21, 2011, the Company completed the acquisition of 51% of the equity shares of Jonway for a total purchase price of $31.75 million consisting of approximately $29 million in cash and 8 million shares of ZAP common stock valued at $2.7 million. The Company believes that the acquisition will allow it to expand its electric vehicle ("EV") business and distribution network around the world, give it access to the rapidly growing Chinese market for electric vehicles and have competitive production capacity in an ISO 9000 certified manufacturing facility with the capacity and resources to support production of ZAP's electric vehicles and new product line of mini vans and mini SUVs.

Jonway is a limited liability company incorporated in Sanmen County, Zhejiang Province of the People's Republic of China ("the PRC") on April 28, 2004 by Jonway Group Co., Ltd. ("Jonway Group"). Jonway Group is under the control of three individuals, Wang Huaiyi, Alex Wang (the son of Wang Huaiyi) and Wang Xiao Ying (the daughter of Wang Huaiyi and all three individuals collectively referred to as the "Wang Family").

Jonway's approved scope of business operations includes the production and sale of vehicle spare parts, and the sale of UFO licensed SUV vehicles. The principal activities of Jonway are the production and sale of automobile spare parts and the production and distribution of SUVs in China using the consigned UFO license from an affiliate of Jonway Group.

With the completion of the acquisition of a majority interest in Jonway, the combined companies' new product lines include the A380 SUV EV and the minivan EV. Both products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles. Since the acquisition, the companies have been working on developing the joint product line, marketing and sales plans for the 2013 EV product lines.

Jonway received certification of the EV production line by the Chinese electric vehicle authorities, which occurred in February 2013. Meanwhile; the engineering teams from both companies are undertaking extensive testing of the A380 SUV EV at Jonway Auto and ZAP Hangzhou EV research and development center.

Our target is to deliver the EV A380 SUV and EV minivan in the first half of 2013, with the purpose of obtaining the Chinese central government electric vehicle incentives of up to RMB 60,000 or over $9,510 per vehicle. ZAP intends to use the existing manufacturing plant from Jonway that is being upgraded for the production of the electric vehicles and utilizing the existing Jonway models to gain economy of scale and reduce molding investment costs. ZAP also intends to leverage Jonway's distribution and customer support centers in China to support the sales and marketing of its new EV product line. In the meantime, Jonway auto established its two wholly-owned subsidiaries, namely, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd focusing on the vehicle leasing business in Taizhou.

ZAP plans to focus on developing new international markets such as Brazil, South Africa, Russia and some of the Central America countries such as Costa Rica, Ecuador and Mexico. These countries are looking for affordable gasoline and electric SUVs and minivans with a competitive price and qualities.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles, ZAP Stores and ZAP Hong Kong for the three months ended March 31, 2013 and 2012 and are prepared in accordance with United States ("U.S.") generally accepted accounting principals ("GAAP"). In these financial statements, "subsidiaries" are companies that are over 50% controlled, the financial statements of which are consolidated with those of the Company. Significant intercompany transactions and balances are eliminated in consolidation; profits from intercompany sales, are also eliminated; non -controlling interests are included in equity. We account for our 37.5% interest in the ZAP Hangzhou Joint Venture using the equity method of accounting.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2013 and 2012 may not be indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period. These unaudited condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the "SEC") on April 16, 2013 (our "10-K").

LIQUIDITY AND RESOURCES

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in securities, and our operating and capital expenditure commitments. Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. Our principal sources of liquidity consist of our existing cash on hand and bank facilities from China-based banks for Jonway Auto.

In March 2012, Jonway was approved up to an aggregate of $0.8 million of credit line from a Sanmen local Bank. As of December 31, 2012, this credit line was fully used. The credit line was repaid and expired in March 2013.

In May 2012, we were approved up to an aggregate of $ 23.8 million of credit line from the Sanmen Branch of CITIC Bank ("CITIC") through Jonway. When drawn down, the credit line will be secured by land and buildings on this land owned by Jonway and guaranteed by Jonway Group. Under the above credit line in November 2012, Jonway borrowed one year short-term loans in the aggregate amount of approximately $7.2 million. The annual interest rate is 6.60%, and the loans are due in November 2013. We have also drawn $5.7 million in the form of notes payable as of March 31, 2013. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in May, 2013. As of March 31, 2013, the unused credit line of $10.9 million has not been used. The credit line expires in May 2013.

In December 2012, we were approved up to an aggregate of $4.0 million on a credit line from Taizhou Bank. This credit line was guaranteed by related parties. In December 2012 and February 2013, we borrowed two short-term loans under this credit line aggregating a total amount of $1.6 million. The annual interest rates are 8.06% and 8.46% respectively, and the loans are due in June and July, 2013, respectively. The remaining credit line was used in the form of notes payable. As of March 31, 2013, the credit line was fully used. The credit line expires in December 2013.

In December 2012, we were approved up to an aggregate of $8.9 million for a credit line from Everbright Bank. As of March 31, 2013, $9.4 million was drawn down as notes payable (Jonway's deposit of $4.7 million of restricted cash for note payable) as the bank allows up to $500,000 to be overdrawn on the credit line. The credit line expires in December 2013.

As of March 31, 2013, Jonway had $13.6 million in short term bank loans outstanding, which are borrowed from the above stated China-based banks with interest rates ranging from 6.60% to 8.46% per annum and expires at various times through December 2013.

Jonway intends to utilize the credit lines to expand its electric vehicle business as well as other future vehicle models. This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. These credit lines will also be used to support the company's expansion plans, with emphasis on its electric vehicle production line facilities in China. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through May 20, 2014 in the event that we require additional liquidity. In addition, CEVC would likely extend the convertible note which is due August 2013, and in the event that CEVC decides to call on the repayment, the repayment would likely be paid in full or in part in Jonway Auto shares or ZAP shares unless there is a breach by the Company on the covenant of the convertible note.

We will require additional capital to expand our current operations and support on-going operating losses until we can reach a larger sales volume in order to absorb operating overhead costs. In particular, we require additional capital to expand our presence across the world, to continue development of our electric vehicle business, to continue strengthening our dealer network and after-sale service centers and expanding our market initiatives. We also require financing the investment for the continued roll-out of new products and to add qualified sales and professional staff to execute on our business plan and pursue our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias, the electric and other fuel efficient vehicles.

We intend to fund our long term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both. Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments.

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court for the District of Columbia as United States v. ZAP; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration ("NHTSA") about the vehicle recalls; and was uncooperative and evasive with NHTSA. The Company has discontinued the sale of the Zebra vehicles after these 2008 models. The 2008 Zebra vehicles were manufactured by a company called, Fula, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which amount other things, would impose penalties of $6000 to $7000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel. This legal proceeding is subject to many uncertainties, and the outcome of this complaint is not predictable with assurance. The extent of our financial exposure to this matter is difficult to estimate at this time. However, the negative outcome of this complaint could adversely affect the Company's liquidity and resources.

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SEGMENT REPORTING (Schedule Of Segment Results) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Net sales	$ 14,365	$ 12,181
Gross profit (loss)	750	702
Depreciation and amortization	1,605	1,799
Net loss	(3,915)	(4,512)
Total assets	117,667	116,707	115,964
Jonway Conventional Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales	14,235	11,989
Gross profit (loss)	649	723
Depreciation and amortization	947	1,244
Net loss	(2,358)	(2,191)
Total assets	94,227	88,749
Electric Consumer Products [Member]
Segment Reporting Information [Line Items]
Net sales	123	114
Gross profit (loss)	50	28
Depreciation and amortization	657	546
Net loss	(1,605)	(2,119)
Total assets	22,884	27,261
Car Outlet [Member]
Segment Reporting Information [Line Items]
Net sales		73
Gross profit (loss)		7
Depreciation and amortization		2
Net loss		(34)
Total assets	179	447
Advanced Technology Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales	7	5
Gross profit (loss)	51	(56)
Depreciation and amortization	1	7
Net loss	48	(168)
Total assets	$ 377	$ 250

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SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Currency exchange rate, balance sheet application	6.26660		6.27690
Currency exchange rate, statement of operations application	6.3090		6.3079
Allowance for doubtful accounts	$ 80,000		$ 201,000
Inventories, net	9,619,000	11,152,000
Reserved vehicle inventory	545,908,000
Funds diverted from company	116,090,000
Impairment losses	$ 0	$ 2,600,000
Customer Relationships [Member]
Significiant Accounting Policies [Line Items]
Estimated useful life	8 years 6 months
Developments [Member]
Significiant Accounting Policies [Line Items]
Estimated useful life	7 years
Machinery and equipment [Member] | Minimum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	5 years
Machinery and equipment [Member] | Maximum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	10 years
Computer equipment and software [Member] | Minimum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	3 years
Computer equipment and software [Member] | Maximum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	5 years
Office furniture and equipment [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	5 years
Vehicles [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	5 years
Leasehold improvements [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	10 years
Buildings and improvements [Member] | Minimum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	20 years
Buildings and improvements [Member] | Maximum [Member]
Significiant Accounting Policies [Line Items]
Estimated useful lives	30 years
Land Use Rights [Member]
Significiant Accounting Policies [Line Items]
Estimated useful life	50 years

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INCOME TAXES (Schedule of Income Tax Benefit) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Current provision:
USA
PRC
Total current
Deferred benefit:
USA
PRC	13	38
Total Deferred benefit	13	38
Total provision for income taxes	$ 13	$ 38

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables)

3 Months Ended

Mar. 31, 2013

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Foreign Currency Exchange Balance

	March 31, 2013 December 31, 2012
Balance sheet items, except for share capital, additional	$ 1=RMB 6.26660 $1=RMB 6.3090
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.27690 $1=RMB 6. 3079
and cash flows for the periods

Summary of Assets and Liabilities Measured at Fair Value

		December 31, 2012
Assets		Level 1	Level 2	Level 3		Fair Value Measurements
Long-lived assets- 3-door SUV mold	(1)			$	2,560	$	2,560

(1) Included in "Property, plant and equipment, net" on the face of condensed consolidated balance sheets. The original carrying value was $5.12 million. The Company recognized impairment charges of $2.56 million (included in "impairment loss of long-lived assets" on the face of consolidated statements of operations and comprehensive loss) for the year December 31, 2012 . These charges were related to the impairment in the 3-door SUV mold equipment used in the Jonway Auto segment (See Note 2-Accounting for long-lived assets).

Schedule of Estimated Useful Lives of Property and Equipment

Machinery and equipment	5-10 years (Jonway 10 years)
Computer equipment and software	3-5 years
Office furniture and equipment	5 years
Vehicles	5 years
Leasehold improvements	10 years or life of lease,
	whichever is shorter
Building and improvements	20-30 years (Jonway 20 years)

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SIGNIFICANT ACCOUNTING POLICIES (Summary Of Assets And Liabilities Measured At Fair Value) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-lived assets- 3-door SUV mold			$ 2,560,000
Property, plant and equipment	70,809,000	70,214,000
Impairment loss of long-lived assets	0	2,600,000
3-door SUV mold [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Property, plant and equipment			5,120,000
Impairment loss of long-lived assets		2,560,000
Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-lived assets- 3-door SUV mold
Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-lived assets- 3-door SUV mold
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-lived assets- 3-door SUV mold			$ 2,560,000

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PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

3 Months Ended

Mar. 31, 2013

PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]

Schedule of Property, Plant and Equipment

	March 31, 2013		December 31, 2012
Buildings and improvements	$	20,816	$	20,725
Machinery and equipment		48,580		48,081
Office furniture and equipment		501		499
Leasehold improvements		37		37
Vehicles		875		872
		70,809		70,214
Less: accumulated depreciation
and amortization		(18,288)		(16,857)
	$	52,521	$	53,357

Schedule of Intangible Assets

	March 31, 2013			December 31, 2012
Land use right	$	10,250		$	10,217
Software		106			97
		10,356			10,314
Less: accumulated amortization		(570	)		(547	)
	$	9,786		$	9,767

Schedule of Estimated Future Amortization Expense Related to Intangible Assets

	Amortization
Year	Expense
2013	$	182
2014		242
2015		242
2016		242
2017		242
Thereafter		8,636
	$	9,786

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SUBSEQUENT EVENTS (Details) (USD $)	1 Months Ended	3 Months Ended
	May 06, 2013	Mar. 31, 2013
Litigation [Line Items]
Maximum amount of penalties	$ 17,350,000	$ 17,350,000
Minimum [Member]
Litigation [Line Items]
Civil penalties amount	6,000	6,000
Maximum [Member]
Litigation [Line Items]
Civil penalties amount	$ 7,000	$ 7,000

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

3 Months Ended

Mar. 31, 2013

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2- SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration of Credit Risk

The Company's operations are all carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with one high credit quality financial institution. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway's facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway's facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company's business, financial condition and results of operations.

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

- Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

- Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.

- Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company's customary shipping terms are FOB shipping point.

- Collectability is reasonably assured. The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-based compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the "Black-Scholes model"). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, Accounting for Uncertainty in Income Taxes defines uncertainty in income taxes and the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

United States federal, state and local income tax returns prior to 2009 are not subject to examination by tax authority.

Foreign Currency Translation

The Company and its wholly owned subsidiary/investments, maintain their accounting records in United States Dollars ("US$") whereas Jonway Auto maintains its accounting records in the currency of Renminbi ("RMB"), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto's principal country of operations is the PRC. The financial position and results of our operations are determined using RMB, the local currency, as the functional currency. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder's equity as "Accumulated Other Comprehensive Income."

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	March 31, 2013 December 31, 2012
Balance sheet items, except for share capital, additional	$ 1=RMB 6.26660 $1=RMB 6.3090
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.27690 $1=RMB 6. 3079
and cash flows for the periods

Loss per Share

Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company's potentially dilutive shares, which include outstanding common stock options convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share.

Cash and cash equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the company and are comprised of investments having maturities of three months or less when purchased. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway's banks. To issue these bank acceptance notes to Jonway's suppliers, the banks require a deposit of 50% or 100% of the full amount of such notes which are payable within 6 months from issuance. Upon the maturity date, restricted funds will be used to settle the bank acceptance notes. The restricted cash as shown in the consolidated balance sheets is strictly used by Jonway Auto which is based in China against the bank notes provided by the various Chinese banks that are providing the credit facilities or loans. The credit facilities and loans are used primarily to fund working capital and support the operating losses incurred by Jonway Auto.

Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. Accounting standards establish a three level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair values. For certain of the Company's financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The three levels of inputs are defined as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management's best estimate of fair value.

The Company records certain assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States. Generally assets are measured at fair value on a nonrecurring basis as a result of impairment changes. Fair value was estimated based on discounted cash flow. Assets measured at fair value on a nonrecurring basis for the period ended March 31, 2013 are summarized below (in thousands):

		December 31, 2012
Assets		Level 1	Level 2	Level 3		Fair Value Measurements
Long-lived assets- 3-door SUV mold	(1)			$	2,560	$	2,560

(1) Included in "Property, plant and equipment, net" on the face of condensed consolidated balance sheets. The original carrying value was $5.12 million. The Company recognized impairment charges of $2.56 million (included in "impairment loss of long-lived assets" on the face of consolidated statements of operations and comprehensive loss) for the year December 31, 2012 . These charges were related to the impairment in the 3-door SUV mold equipment used in the Jonway Auto segment (See Note 2-Accounting for long-lived assets).

The Company believes the reported carrying amounts of its current assets and current liabilities approximate fair value, based upon the short-term nature of these accounts. The fair value of the Company's investment in joint ventures and its receivable from related parties are impracticable to determine.

Accounts Receivable and Notes Receivable

Accounts and note receivable consist mainly of receivables from our established dealer network. A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit-related losses to date. The allowance for doubtful accounts was $80,000 and $201,000 at March 31, 2013 and December 31, 2012, respectively

Inventories

Most of the inventory on the balance sheet consisting of $9,619 million is in Jonway Auto in China, ZAP's Inventories of approximately half a million out of the total consist primarily of vehicles, both gas and electric, parts and supplies, and finished goods and are carried at the lesser of lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company's products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

As of March 31, 2013, ZAP has reserved $545,908 of its vehicle inventory that is held by Steve Schneider on River Road property that was being leased by ZAP from former ZAP Co-CEO and current ZAP Director. Steven Schneider. Mr. Schneider took this inventory without ZAP authorization before and after an illegal and failed attempt to take control of ZAP. He refuses to release the inventory until a lawsuit he has filed against the Company is heard by the courts. During the attempted takeover, $116,090 was diverted to a bank account set up by a former employee and board directors. To date, these funds have not been recovered.

Property and equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements which are almost all in Jonway Auto in China. ZAP does not own any property or any significant amount of equipment in the U.S. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset's estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized. Estimated useful lives are as follows:

Machinery and equipment	5-10 years (Jonway 10 years)
Computer equipment and software	3-5 years
Office furniture and equipment	5 years
Vehicles	5 years
Leasehold improvements	10 years or life of lease,
	whichever is shorter
Building and improvements	20-30 years (Jonway 20 years)

Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and can not be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as "ownership". Land use rights are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight -line method. Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

Long-lived assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value. There are no impairment losses of long-lived assets for the periods ended March 31, 2013 and $2.6 million of impairment loss for the year ended December 31, 2012, respectively.

Intangible Assets-Finite

Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 2 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

Goodwill and Intangible Assets - Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles. The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year. The Company performs its annual impairment test in the fourth quarter of each year. Calculating the fair value of the reporting units requires significant estimates and assumptions by management. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Product warranty costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall. The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

Jonway provides a 2-year or 60,000 kilometer warranty for its SUV products. Jonway records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders' equity that are not reflected in the consolidated statements of operations. The Company's comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments.

Risks and Uncertainties

A substantial portion of the company's operations are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The company's results may be adversely affected by interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Recent Accounting Pronouncements

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters ("ASU 2013-05"). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, ASU 2013-05 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-02 becomes effective for the company prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material effect on the Company's consolidated financial statements.

In April 2013, the FASB has issued Accounting Standards Update (ASU) No. 2013-4, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is fixed at the Reporting Date. ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among it co-obligors and any additional amount the reporting entity expects to pay on behalf of it co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this standard to have a material impact on the Company's unaudited condensed consolidated financial position and results from operations.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Consolidated Balance Sheet [Abstract]
Common stock, shares authorized	800,000,000	800,000,000
Common stock, par value
Common stock, shares issued	302,518,002	302,448,325
Common stock, shares outstanding	302,518,002	302,448,325

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 12-INCOME TAXES

The Company is subject to United States of America ("US") and People's Republic of China ("PRC") profit tax.

US

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the year. The applicable income tax rate for the Company for the three months ended March 31, 2013 and 2012 was 35%, respectively. No tax benefit has been realized since a valuation allowance has offset the deferred tax asset resulting from the net operating losses.

PRC

Effective January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions. As such, the Company's subsidiary in PRC is subject to an enterprise income tax rate of 25%.

No provisions for income taxes have been made as the Company has no taxable income for the periods. $13,000 of tax benefits were recognized due to the change in the deferred tax assets.

Loss before income taxes consisted of:

	For Three Months Ended
	March 31
	2013			2012
US	$	(1,557	)	$	(2,321	)
PRC		(2,371	)		(2,229	)
	$	(3,928	)	$	(4,550	)
Benefit for income taxes consisted of:

	For Three Months Ended
	March 31.
	2013		2012
Current provision:
US	$	--	$	--
PRC		--		--
Total current		-		--
Deferred benefit
US		-		-
PRC		13		38
Total Deferred benefit		13		38
Total benefit for income taxes	$	13	$	38

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 15, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013
Entity Registrant Name	ZAP
Entity Central Index Key	0001024628
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		302,518,002

XML

LITIGATION

3 Months Ended

Mar. 31, 2013

LITIGATION [Abstract]

LITIGATION

NOTE 13- LITIGATION

1) On January 11, 2013, Cathaya Capital, L.P., a ZAP shareholder ("Cathaya"), and Priscilla Lu, Chairman of the ZAP Board of Directors ("Lu") (collectively "Plaintiffs"), filed a lawsuit in the Superior Court of California, County of Los Angeles, styled Cathaya Capital, L.P. et al. v. ZAP, et al., Case No. BC499106 (the "Cathaya Lawsuit"). By the Cathaya Lawsuit, Plaintiffs, derivatively on behalf of the nominally-named defendant ZAP, asserted claims for breach of fiduciary duty and conversion against the following three members of the ZAP Board of Directors: Mark Abdou, Steven Schneider and Wang Gang a/k/a Alex Wang (the "Minority Board Member Defendants"). In addition, Plaintiffs, derivatively on ZAP's behalf, sought declaratory and injunctive relief against the Minority Board Member Defendants for their alleged tortuous misconduct and breaches of fiduciary duty. Plaintiffs also asserted causes of action on their own behalf pursuant to California Corporations Code sections 304 and 709, for a judgment as to the rightful composition of the Board and to remove the Minority Board Member Defendants from the Board.

On February 19, 2013, the Minority Board Member Defendants filed a Cross-Complaint in the Cathaya Lawsuit (the "Cross-Complaint"). In the Cross-Complaint, the Minority Board Member Defendants joined in bringing a cross-claim for a determination as to the rightful composition of the Board pursuant to California Corporations Code section 709. (On March 14, 2013, Wang Gang a/k/a Alex Wang filed a Request for Dismissal withdrawing as a cross-complainant.) The Cross-Complaint also asserts the following purported claims: (1) Steven Schneider's claim for "breach of promise" against Pricilla Lu based on an alleged August 2009 oral promise that ZAP would provide Steven Schneider with a more favorable employment contract; (2) Steven Schneider's claim for "breach of agreement to negotiate in good faith" against ZAP, based on ZAP's alleged failure in August 2009 to negotiate an employment contract with Steven Schneider; (3) Mark Abdou's claim against ZAP alleging that ZAP breached a Director Agreement with Mark Abdou ("Abdou Director Agreement") by failing to pay all compensation allegedly due there under; (4) Mark Abdou's claim for "breach of the covenant of good faith and fair dealing" against ZAP based on the alleged breaches of the Abdou Director Agreement; and (5) a claim against Lu for tortuous interference with contractual relations (although the Cross-Complaint is unclear as to who is bringing the tortuous interference claim against Lu and the factual basis for the claim). The Cross-Complaint seeks an unspecified amount of damages and other consideration.

On March 22, 2013, Plaintiffs/Cross-Defendants' Cathaya and Lu filed a Demurrer to the Cross-Complaint, which is set for hearing on June 27, 2013. ZAP's response to the Cross-Complaint is not yet due. ZAP intends to vigorously defend the Cross-Complaint.

The Court has already heard and determined the parties' respective claims seeking a determination as to the proper composition of the ZAP Board of Directors. On February 2, 2013, the Court ruled on Plaintiffs' application seeking such determination pursuant to California Corporations Code section 709, ruling that the purported actions taken by the Minority Board Member Defendants at a purported December 31, 2012 meeting of the ZAP Board of Directors, including the appointment of Luo Hua Lian and Juan Gao to fill alleged vacancies on the Board, were null and void. On March 1, 2013, the Court denied the Minority Board Member Defendants' application pursuant to California Corporations Code section 709, which had sought an order declaring that Co Nguyen and Aileen Kao were not validly appointed to the ZAP Board of Directors in October 2012.

As a result of the Court's rulings on the parties' respective applications under California Corporations Code section 709, the Board is comprised of the directors that were members of the Board prior to the purported December 31, 2012 Board meeting, except for the previously announced resignation of Alex Wang at a meeting of the Board held on January 20, 2013, and the appointment of Wang Huai Yi as a member of the Board at the same meeting to fill the vacancy created by Alex Wang's resignation.

There is no trial date set regarding the parties' remaining claims.

2. A derivative lawsuit filed by Cathaya Capital against Steve Schneider, Mark Abdou, and Alex Wang is awaiting court hearing date to be announced and is being taken over by the Company, which is currently pursuing Steve Schneider to return inventory and assets that were removed from the Company's warehouse, as well as cash that was redirected and thus far not yet recovered by the Company, to a new bank account that was not authorized by the Board of Directors of ZAP's.

3. Integrity Automotive, LLC and Randall Waldman v. ZAP Motor Manufacturing,

Inc., et al., Complaint filed on March 2, 2010, Case No. 10 CI-01383 in the Jefferson Circuit Court, Division Ten, of the Commonwealth of Kentucky. The Complaint alleges causes of action for civil conspiracy, breach of fiduciary duties, conversion, and breach of contract and that the Defendants conspired against plaintiffs in connection with certain business transactions in Kentucky. Although no specific monetary demand is included, the Complaint seeks punitive damages, actual damages, and interest. All of the defendants answered and cross-complained on March 29, 2010, and discovery was served on plaintiffs requiring responses in early May 2010. The Company intends to defend itself vigorously in this matter and has learned that plaintiff Randall Waldman was arrested in Kentucky in late April, 2010, and charged with felonious criminal conduct. The Court indicated an intent to dismiss the case for failure to prosecute in early 2012 but the plaintiffs retained new counsel and successfully opposed the dismissal. There has been no activity in the case that we are aware of in the past several months.

4 Rainbow Cycle & Marine & Siloam Springs Cycle, v. Voltage Vehicles, Arkansas Motor Vehicle Commission, Case No. 10-008. On April 1, 2010, Rainbow Cycle & Marine & Siloam Spring Cycle (the "Dealer"), an automobile dealer in the State of Arkansas, submitted a complaint to the Arkansas Motor Vehicle Commission (the "Commission") regarding 6 Xebra vehicles purchased from the Company in 2008, each at the price of $8,750.00. The Dealer requested that the Commission order the Company to refund all monies paid by the Dealer to the Company for the vehicles, to pay all transportation costs, and in addition to assess penalties and interest charges against the Company in an unspecified amount. The Commission issued a Notice of Hearing on August 11, 2010, setting a hearing for September 15, 2010 on the Dealer's Complaint. The Company responded with a Motion to Dismiss, which the Commission set for hearing on December 15, 2010 and at the same time continued the hearing on the Dealer's Complaint to the same date. After the hearing, the Commission ruled that the Company was required to refund the Dealer's purchase price for the vehicles and to pay for transportation of the vehicles off of the Dealer's premises. In response, the Company's local counsel filed a Petition for Judicial Review on March 1, 2011 in the Circuit Court of Pulaski County, State of Arkansas, challenging the Commission's decision. On November 11, 2011, the Circuit Court upheld the decision of the Commission, and the Company filed a notice of Appeal on December 16, 201 1, and the Arkansas Supreme Court reversed and remanded to the Commission for further proceedings on October 11, 2012. There has been no subsequent activity in this matter since that time of which we are aware. In the event of a final, unfavorable outcome, the potential loss to the Company associated with the refund would be approximately $57,000.

5 Long v. ZAP, et al., Case No. SW-250380, filed in the Superior Court of the State of California, County of Sonoma on September 20, 201 1. The Complaint alleges causes of action for injunctive relief and damages for breach of contract, breach of the implied covenant of good faith and fair dealing, failure to pay wages, wrongful termination, fraud, defamation, and illegal recording in violation of privacy rights. Included as defendants are ZAP, Jonway, Steve Schneider, William Hartman, and Priscilla Lu. The Company entered into a settlement agreement with the plaintiff in early September, 2012 and made an installment payment on September 21, 2012. The case against the Company was settled in December, 2012. The suit against individual defendants, Schneider, Hartman, and Lu is on-going.

6 Alvarez Lincoln - Mercury, Inc. vs. ZAP, Voltage Vehicles, Liuzhou Wuling

Motors Co., Ltd., Pricilla Lu, and Steve Schneider, Complaint filed on May 30, 2012, in the Superior Court of the State of California, County of Riverside, Case No. RIC 1208152. The Complaint alleges causes of action for breach of written contract; money had and received fraud by intentional misrepresentation, fraud by concealment, and fraud by negligent misrepresentation. The allegations contained in the Complaint include a claim that plaintiff believed it was purchasing 2010 model year vehicles but that in fact the vehicles were model year 2009. No trial date has as yet been set, and the parties continue to negotiate a possible resolution. The Company intends to vigorously defend itself in this matter if plaintiff refuses to enter into a reasonable settlement.

7. Susan Sher v. ZAP, Case No. SCV-253158, filed on February 1, 2013, in the Superior Court of California, County of Sonoma. The Complaint alleges causes of action for breach of implied warranty and reimbursement under the California "Lemon Law" statutes. The Complaint contains allegations that ZAP failed to repair a 2008 Xebra purchased by plaintiff in violation of the statutes and an implied warranty of merchantability. The parties are discussing settlement, but the Company is prepared to defend itself vigorously if plaintiff refuses to enter into a reasonable settlement.

8. A letter was received in May 2012 from a shareholder regarding various prior transactions of the Company which the Company is working to address and clarify. A tolling agreement was reached between the Company and shareholder on October 22, 2012 under which ZAP, through its legal counsel shall provide a written summary of the actions taken during the preceding month with respect to the matters regarding the prior transactions in question by the shareholder. These transactions include, but are not limited to, a) ZAP, Jonway Group, Jonway Auto and Cathaya Capital shall each in all respects comply with their executory obligations with respect to the continued funding of ZAP, b) resolve the litigation regarding the former contracted employee, c) use reasonable efforts to defend, compromise and/or settle any pending and future litigations and ZAP shall use all reasonable efforts to cause all officers, directors and such other individuals who are or were employees, agents or representatives of ZAP to fully cooperate in the defense of future arbitrations or litigations. This agreement is binding through December 31, 2015.

Other Regulatory Compliance Matters

ZAP has filed with the National Highway Transportation Safety Agency (NHTSA) that it is in non compliance with Department of Transportation (DOT) requirements potential hazard may exist because the Model -Year 2008 XEBRA sedan and pickup does not stop in the required distance at 30 miles per hour and the master cylinder does not have separate brake fluid reservoirs with proper labeling and other miscellaneous non compliance issues. A public hearing was held in Washington DC on October 9, 2012 that allowed the DOT to take comments from the public and from their inside officers for consideration in their determination of whether ZAP has made a reasonable effort to 1) notify dealers and purchasers of the brake recall and 2) provide a remedy to the public to correct the brake problem. There were recommendations at the public hearing from DOT staff testifying at the hearing that ZAP should be subject to penalties and be required to repurchase the MY 2008 Xebra vehicles. ZAP has contracted with an independent testing facility to test the remedy that ZAP believes will correct the stopping distance problem, the duel brake fluid reservoir with correct labeling and other miscellaneous non compliance issues.

On November 16, 2012 ZAP received notification from the Office of Chief Counsel of the National Highway Traffic Safety Administration ("NHTSA") containing Findings, Conclusions, and Order on ZAP's Failure to Reasonably Meet its Recall Remedy and Notification Requirements ("Order"), dated November 13, 2012, related to the recall of ZAP's model year 2008 Xebra, an electric three-wheeled motor vehicle with an enclosed sedan or truck body style.

NHTSA determined that ZAP has not reasonably met its recall remedy and notification requirements and was ordered to remedy the model year 2008 Xebra by, among other things, refunding the purchase price, less reasonable allowance for depreciation, providing notice of this refund remedy to model year 2008 Xebra owners, purchasers, and dealers, and picking up and disposing of each recalled vehicle at ZAP's sole expense. NHTSA determined that the average market price of a model year 2008 Xebra as of October 12, 2012 to be $3,100. The order stated a total of 691 model year 2008 Xebra vehicles are subject to this remedy. ZAP's internal records indicate that 691 vehicles were imported into the U.S. by ZAP, of which 627 were shipped to customers located in the U.S.

ZAP was ordered to respond to NHTSA and to take certain other actions by November 26, 2012. ZAP is in on-going discussions with NHTSA on this matter.

The Company has accrued for estimated expenses related to above claims.

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court of the District of Columbia as United States v. Zap; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration ("NHTSA") about the vehicle recalls; and was uncooperative and evasive with NHTSA. The Company has discontinued the sale of the Zebra vehicles after these 2008 models. The 2008 Zebra vehicles were manufactured by a company called, Fulu, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which among other things, would impose penalties of $6,000 to $7,000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel. The Company hopes to resolve this matter in a mutually satisfactory manner

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements Of Operations And Comprehensive Loss [Abstract]
Net sales	$ 14,365	$ 12,181
Cost of goods sold	13,615	11,479
Gross profit	750	702
Operating expenses:
Sales and marketing	1,433	2,112
General and administrative	1,976	2,491
Research and development	150	279
Total operating expenses	3,559	4,882
Loss from operations	(2,809)	(4,180)
Other income (expense):
Interest expense, net	(822)	(486)
Loss from equity investment in joint venture	(485)	(119)
Other income (expense), net	188	235
Total other expense	(1,119)	(370)
Loss before income taxes	(3,928)	(4,550)
Income tax benefit (expense)	13	38
Net Loss	(3,915)	(4,512)
Less: Net loss attributable to non controlling interest	1,155	1,073
Net loss attributable to Zap common shareholders	(2,760)	(3,439)
Other Comprehensive income (loss)
Foreign currency translation adjustments	206	(187)
Net unrealized (loss) on available for sale securities		(474)
Other comprehensive income/( loss)	206	(661)
Total comprehensive loss	(3,709)	(5,173)
Less: Comprehensive loss attributable to non controlling interest	(1,054)	(1,165)
Comprehensive loss attributable to ZAP common shareholders	$ (2,655)	$ (4,008)
Net loss per share attributable to common shareholders:
Basic and diluted	$ (0.01)	$ (0.01)
Weighted average number of common shares outstanding:
Basic and diluted	302,518	298,217

XML

INVESTMENT IN JOINT VENTURES

3 Months Ended

Mar. 31, 2013

INVESTMENT IN JOINT VENTURES [Abstract]

INVESTMENTS IN JOINT VENTURES

NOTE 7- INVESTMENT IN JOINT VENTURES

On December 11, 2009, the Company entered into a Joint Venture Agreement to establish a new US-China company incorporated as ZAP Hangzhou to design and manufacture electric vehicle and infrastructure technology with Holley Group, the parent company of a global supplier of electric power meters and Better World. Priscilla Lu, Ph.D., who is the current Chairman of the Board of ZAP, is also a director and General Partner of Cathaya Capital, which is a shareholder of Better World. In January of 2011, Holley Group's interest in ZAP Hangzhou was purchased by Jonway Group. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Jonway Group owns 25% of the equity shares of ZAP Hangzhou. The joint venture partners have also funded the initial capital requirements under the agreement for a total of $3 million, of which ZAP's portion is $1.1 million.

In November 2011, Jonway and ZAP Hangzhou jointly set up Shanghai Zapple Electric Vehicle Technologies Co., Ltd. (Shanghai Zapple) with registered capital of RMB 20 million. Jonway and ZAP Hangzhou each own 50% of the equity share of Shanghai Zapple. Jonway injected RMB 5 million into this joint venture and ZAP Hangzhou injected RMB 3 million. Shanghai Zapple's approved scope of business includes: technical advice, technical development, technical services, technology transfer regarding electric vehicle technology, auto technology, energy technology, material science and technology, sale of commercial vehicle and vehicle for nine seats or more, auto parts, auto supplies, lubricant, mechanical equipment and accessories, business management consulting, industrial investment, exhibition services, business marketing planning, car rental (shall not be engaged in financial leasing), import and export of goods and technologies.

The carrying amount of the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011		554			736			1,290
Less: investment loss		(123	)		(280	)		(403	)
CTA		6			5			11
Balance as of December 31, 2012	$	437		$	461		$	898
Less: Investment loss		(24	)		(461	)		(485	)
CTA		4			--			4
Balance as of March 31, 2013		417			--			417

The Company recorded a loss of $24,000 and $51,000 in ZAP Hangzhou for the three months ended March 31, 2013 and 2012, respectively. Due to the suspension of Shanghai Zapple operations, the company recorded a loss of $461,000 and $68,000 in Shanghai Zapple for the periods ended March 31, 2013 and 2012 respectively. These losses relate to investment in non-consolidated joint ventures accounted for under the equity method of accounting because the company does not have control.

Summarized financial information of Hangzhou ZAP and Shanghai Zapple are as follows: (in thousands)

	March 31, 2013		December 31, 2012
Shanghai Zapple
Total assets	$	--	$	1,472
Total liabilities		--		867
Revenue		--		-
Hangzhou ZAP
Total assets		1,476		1,682
Total liabilities		33		118
Revenue	$	81	$	922

XML

DISTRIBUTION AGREEMENTS

3 Months Ended

Mar. 31, 2013

DISTRIBUTION AGREEMENTS [Abstract]

DISTRIBUTION AGREEMENTS

NOTE 6 - DISTRIBUTION AGREEMENTS

Distribution agreements are presented below (in thousands):

	March 31, 2013		December 31, 2012
Better World Products-related party	$	2,160	$	2,160
Jonway Products		14,400		14,400
		16,560		16,560
Less amortization		(5,641)		(5,281)
	$	10,919	$	11,279

Amortization expense related to these distribution agreements for the periods ended March 31, 2013 and 2012 were $360,000 and $540,000, respectively. Amortization is based over the term of the agreements. The estimated future amortization expense, as follows (in millions):

Year ended December 31,
2013	$	1,080
2014		1,440
2015		1,440
2016		1,440
2017		1,440
Thereafter		4,079
Total	$	10,919

Distribution Agreement with Better World, Ltd

On January 15, 2010, ZAP entered into a Stock Purchase Agreement with a related party, Better World, Ltd., a British Virgin Islands company, whereby the Company issued 6 million shares of its common stock valued at $2.16 million in exchange for an agreement on terms relating to rights to the distribution of Better World products, such as charging stations for electric vehicles both in the U.S. and internationally. Priscilla Lu, Chairman of the Board of Directors of ZAP, is also General Partner of Better World, Ltd.

Distribution Agreement with Goldenstone Worldwide Limited for Jonway Products

On October 10, 2010, ZAP entered into an International Distribution with Goldenstone Worldwide Limited as the distributor of Jonway products such as gas SUV's and gas and electric motor scooters, both in the U. S. and internationally. In connection with the distribution agreement the Company also issued 30 million shares of ZAP common stock valued at $14.4 million. The Jonway Group had previously granted exclusive worldwide distribution of Jonway products to Goldenstone Worldwide Limited. ZAP acquired a 51% equity interest in Jonway Auto but this equity interest did not include the worldwide distribution rights for Jonway Products. Therefore it was necessary for ZAP to acquire distribution rights for Jonway Products.

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INVENTORIES, NET (Tables)

3 Months Ended

Mar. 31, 2013

INVENTORIES, NET [Abstract]

Schedule of Inventories

	March 31, 2013		December 31, 2012
Work in Process	$	1,423	$	2,155
Parts and supplies		4,906		4,178
Finished goods		5,551		7,144
		11,880		13,477
Less - inventory reserve		(2,261)		(2,325)
Inventories, net	$	9,619	$	11,152

Schedule of Inventory Reserve

	March 31, 2013
Balance opening period	$	2,326
Current provision for Jonway Auto		-
Current provision for inventory ZAP-net		(65)
Balance end of period	$	2,261

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 14 - COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $2.7 million at March 31, 2013. The guarantee expires in November 2013. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2013

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 10 - SEGMENT REPORTING

Operating Segments

Accounting Standards Codification ("ASC") Topic 280, Segment Reporting ("ASC 280"), establishes standards for the way public business enterprises report information about operating segments. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, Consumer Product and Car Outlet. The Jonway Vehicles segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway's EV A380SUV and EV minivan in 2013. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters. Our Car Outlet segment represents operation of a retail car outlet that sells pre-owned conventional vehicles and advanced technology vehicles. These segments are strategic business units that offer different services. They are managed separately because each business requires different resources and strategies. The Company's chief operating decision making group, which is comprised of the Chief Executive Officer and the senior executives of each of ZAP's strategic segments, regularly evaluate the financial information about these segments in deciding how to allocate resources and in assessing performance.

The performance of each segment is measured based on its profit or loss from operations to ZAP before income taxes. Segment results are summarized as follows (in thousands):

	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended March 31, 2013:
Net sales	$	14,235		$	123		$	--		$	7		$	14,365
Gross profit (loss)	$	649		$	50		$	--		$	51		$	750
Depreciation and amortization	$	947		$	657		$	--		$	1		$	1,605
Net profit (loss)	$	(2,358	)	$	(1,605	)	$	--		$	48		$	(3,915	)
Total assets	$	94,227		$	22,884		$	179		$	377		$	117,667
For the three months ended March 31, 2012
Net sales	$	11,989		$	114		$	73		$	5		$	12,181
Gross profit (loss)	$	723		$	28		$	7		$	(56	)	$	702
Depreciation and amortization	$	1,244		$	546		$	2		$	7		$	1,799
Net loss	$	(2,191	)	$	(2,119	)	$	(34	)	$	(168	)	$	(4,512	)
Total assets	$	88,749		$	27,261		$	447		$	250		$	116,707

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.

Customer information

Approximately 99% or $14.2 million of our revenues for the three months ended March 31, 2013 are from sales in China. Jonway Auto distributes its products to an established network of over 100 factory level dealers in China with some contributing more than 10% of our consolidated revenue

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RELATED PARTIES (Narrative) (Details) (USD $)		3 Months Ended		12 Months Ended
	Mar. 31, 2013 Zhejiang UFO [Member]	Mar. 31, 2013 Jonway Group [Member]	Mar. 31, 2012 Jonway Group [Member]	Dec. 31, 2012 Down Payment Convertible Note [Member]
Related Party Transaction [Line Items]
Amount that may be borrowed				$ 3,000,000
Number of vehicles				75
Interest rate				8.00%
Purchase from related party		316,000	337,000
Amount due from related party	$ 1,750,000

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

3 Months Ended

Mar. 31, 2013

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES [Abstract]

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

NOTE 8 -LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit

In March, 2012, Jonway was approved up to an aggregate of $0.8 million of credit line from a Sanmen local Bank. As of December 31, 2012, this credit line was fully used. The credit line was repaid and expired on March 31, 2013.

In May 2012, we were approved up to an aggregate of $ 23.8 million of credit line from the Sanmen Branch of CITIC Bank ("CITIC") through Jonway. When drawn down, the credit line will be secured by land and buildings on this land owned by Jonway and guaranteed by Jonway Group. Under the above credit line in November 2012, Jonway borrowed one year short-term loans in the aggregate amount of approximately $7.2 million. The annual interest rate is 6.60%, and the loans are due in November 2013. We have also drawn $5.7 million in the form of notes payable by March 31, 2013. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in May 2013. As of March 31, 2013, the unused credit line of $10.9 million has not been used. The credit line expires in May 2013.

In December 2012, Jonway was approved up to an aggregate of $4.0 million on a credit line from Taizhou Bank. This credit line was guaranteed by related parties. At March 31, 2013, this credit line was fully used in form of short term bank loans $1.6 million and notes payable of $5.1 million (Jonway deposited $2.7 million as restricted cash as collateral against the notes payable in order for the bank to release $5.1 million of notes payable) . The credit line expires in December 2013.

In December 2012, Jonway was approved up to an aggregate of $8.9 million of credit line from Everbright Bank. As of March 31, 2013, $9.4 million was drawn as notes payable (Jonway deposited $4.7 million as restricted cash as collateral against the notes payable in order for the bank to release the additional amounts above the $8.9 million of credit line. The credit line expires in December 2013.

Short term debt

Under the above mentioned credit line of $23.8 million granted by CITIC, Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.6 million which was drawn down on May 25, 2012. The annual interest rate is 8.05% and was repaid in December, 2012. In November 2012, Jonway borrowed another one year short-term loan in the aggregate amount of approximately $7.2 million from CITIC under the credit line. The annual interest rate is 6.60%, and expires in November 2013. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012 in which land use right and a building at a total carrying amount of $5.9 million has been pledged as security for this loan.

In December 2012, Jonway entered into two short-term loans with Taizhou Bank for the aggregating amount of $1.6 million. The annual interest rates are 8.06% and 8.46% respectively, and the loans are due in February and June 2013, respectively. The loans are guaranteed by Jonway Group, shareholder Huaiyi Wang and his two families. In February 2013, $0.8 million was renewed and expires in July 2013.

During 2012, Jonway in total borrowed $12.6 million and repaid $9.3 million. The weighted average annual interest rate was 6.51%. In the first quarter of 2013, Jonway borrowed $5.6 million and repaid $0.8 million. The weighted average annual interest rate was 6.90%.

In January and February, 2013, Jonway borrowed $1.4 million and $3.3 million, respectively, from Industrial and Commercial Bank of China (ICBC). $1.4 million expires in January 2014 and $3.4 million expires at various dates during 2013 from May 2013 through December 31, 2013. The annual interest rate is 6.90%. The loans are guaranteed by shareholders Alex Wang and Huaiyi Wang, with collateral pledged by land use right and buildings at a carrying amount of approximately $3.7 million.

In May 2013, approximately $1.1 million of short term debt to ICBC was repaid.

	March 31, 2012		December 31, 2012
Loan from CITIC bank	$	7,181		7,133
Loan from ICBC		4,787		--
Loan from Taizhou Bank		1,588		1,585
Loan from Pay-Ins Prem		14		36
		13,570		8,754

As of March 31, 2013, the Company has bank acceptance notes payable in the amount of $22.7 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of six (6) months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these banks, in order to ensure future credit availability. As of March 31, 2013, the restricted cash for the notes was $16.1 million.

Bank acceptance notes - 3 to 6 month term for each note issued

	March 31, 2013		December 31, 2012
a) Bank acceptance notes payable to China Everbright bank	$	9,415		6,334
b) Bank acceptance notes payable to Taizhou bank		5,189		4,627
c) Bank acceptance notes payable to CITIC bank		5,708		5,608
d) Bank acceptance notes payable to ICBC		2,378		--
e) Bank acceptance notes payable to Yinzuo bank		--		1,268
f) Bank acceptance notes payable to Shanghai Pudong development bank		--		677
		22,690		18,513

a. Notes payable to China Everbright bank have various maturity dates from June, 2013 to September 2013. The notes payable are guaranteed by land use right and a building at a total carrying value of $1.5 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. During 2013, a total amount of 7.2 million was renewed.

b. Notes payable to Taizhou bank have various maturity dates from April 2013 to August, 2013. The Company is required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In 2013, a total of $2.5 million was renewed.

c. Notes payable to CITIC bank have various maturity dates from May, 2013 to September, 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

d. Notes payable to ICBC will be due in July 2013. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

e. Notes payable to Yinzuo bank include 21 bank acceptance notes which expired in March 2013. The Company was required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.

f. On March 13, 2012 the Company and Shanghai Pudong Development Bank signed bank acceptance note agreement for $ 676,811. This bank note facility was issued to Jonway Auto's suppliers and secured by a letter of credit, valued at $ 676,811, of which Jonway Auto was a beneficiary. The bank acceptance notes expired on March 13, 2013.

In April and May, 2013, approximately $7.1 million of notes payable matured. In April 2013, approximately $4.4 million of notes payable were issued and are due in October 2013. The Company is required to maintain cash deposits at 50% or 100% of the notes payable with the bank.

SENIOR CONVERTIBLE DEBT - China Electric Vehicle Corporation ("CEVC") Note

On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the "Agreement") with China Electric Vehicle Corporation ("CEVC"), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., a Cayman Islands exempted limited partnership ("Cathaya"). Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the "Note") in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the "Warrant") exercisable for two years for the purchase up to 20 million shares of the Company's Common Stock at $0.50 per share, as amended (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company's assets other than those assets specifically excluded from the lien created by the Security Agreement.

The Note which initially was scheduled to mature on February 12, 2012 but was extended to August 12, 2013 according to the representation letter dated March 21, 2012 from CEVC. On March 22, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment adjusted the rate at which the note would convert into shares of ZAP Common Stock or shares of capital stock of Zheijiang Jonway Automobile, Co. Ltd. held by ZAP. In addition, the warrant issued in connection with the CEVC note was amended to change the terms of conversion and to extend the maturity date until February 12, 2014. The interest accrued through the maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $20.7 million with a new maturity date of August 12, 2013. The note accrues interest at a rate per annum of 8% effective from February 12, 2012.

The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.,

Since the value of the common stock into which the above-mentioned note is converted is greater than the proceeds for such issuance, a beneficial conversion feature totaling $19 million was recorded. During 2011, a total of $16.9 million in amortization was recorded and charged to interest expense and the remaining balance of $2.1 million of the discount was offset against the Company's equity account due to the note extension to August 12, 2013.

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

NOTE 9-STOCK-BASED COMPENSATION

Services performed and other transactions settled in the company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable, than the fair value of the consideration received.

We have stock compensation plans for employees and directors. We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock-based compensation is accounted for as an equity instrument.

-	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding December 31, 2012		28,691	$	0.44		5.0		--
Options granted under the plan		--						--
Options forfeited and expired		--						--
Options exercisable and Outstanding at March 31, 2013		28,691	$	0.44		4.75		--

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of our stock exceeded the exercise price of the options at March 31, 2013 for those options for which the quoted market price was in excess of the exercise price ("in-the-money­ options"). There were no options in the money at March 31, 2013.

As of March 31, 2013, total compensation cost of unvested employee stock options is $85,000. This cost is expected to be recognized through September 30, 2016. We recorded no income tax benefits for stock-based compensation expense arrangements for the three months ended March 31, 2013, as we have cumulative operating losses.

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RELATED PARTIES

3 Months Ended

Mar. 31, 2013

RELATED PARTIES [Abstract]

RELATED PARTIES

NOTE 11- RELATED PARTIES

Due from (to) related parties

Amounts due from related parties are principally for advances in the normal course of business for parts and supplies used in manufacturing.

Amount due from related parties are as follows:
	March 31, 2013		December 31, 2012
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,750		$	3,093
Jonway Group		989			--
Shanghai Zapple		128			--
Total	$	2,867		$	3,093
Amount due to related parties are follows:
	March 31, 2013		December 31, 2012
Jonway Group	$	--		$	122
Zhejiang UFO Automobile		--			--
Jonway Motor Cycle		--			181
Taizhou Huadu		--			431
Shanghai Zapple		--			36
Hangzhou Zapple		147			147
Betterworld		91			152
Cathaya Capital		152			90
Total	$	390		$	1,159

Promissory notes and Down Payment on Convertible Note from Jonway Group

On December 11, 2011, ZAP entered into a Down Payment Convertible Note agreement with Jonway Group pursuant to which ZAP may borrow $3 million for the production of seventy-five Alias electric vehicles to be delivered and sold in 2012. The unpaid principal amount of the note bears interest at a rate per annum equal to 8%, calculated on the basis of a 365 day year and the actual number of days lapsed. Upon the completion of selling seventy-five Alias vehicles, ZAP will repay the unpaid principal, together with any then unpaid and accrued interest, on or before December 31, 2012. Repayment shall be made at the option of Jonway Group in the form of either cash or ZAP's Common Stock priced as of the date the principal was deposited into Jonway's bank account on behalf of ZAP. As of March 31, 2013, no advance has been made to ZAP from Jonway Group.

Transactions with Jonway Group

Jonway Group is considered a related party as the Wang Family, one of the shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of the plastic spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. For the three months ended March 31, 2013 and 2012 Jonway made purchases from Jonway Group of $316,000 and $337,000.

Jonway Agreement with Zhejiang UFO

Based on a contract by and among Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates:

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO. Jonway has obligation to pay such fees based on the number of SUVs assembled by Zhejiang UFO. As of March 31, 2013, $1,750,000 was accrued and recorded as due from related party.

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INCOME TAXES (Schedule Of Loss Before Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Tax [Line Items]
Loss before income taxes	$ (3,928)	$ (4,550)
US [Member]
Income Tax [Line Items]
Loss before income taxes	(1,557)	(2,321)
PRC [Member]
Income Tax [Line Items]
Loss before income taxes	$ (2,371)	$ (2,229)

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LITIGATION (Details) (USD $)	1 Months Ended	3 Months Ended
	May 06, 2013	Mar. 31, 2013
LITIGATION [Abstract]
Price of vehicles sold		$ 8,750
Potential loss contingency		57,000
Average market price of 2008 Xebra		3,100
Number of vehicles subject to remedy		691
Number of vehicles shipped		627
Litigation [Line Items]
Maximum amount of penalties	17,350,000	17,350,000
Minimum [Member]
Litigation [Line Items]
Civil penalties amount	6,000	6,000
Maximum [Member]
Litigation [Line Items]
Civil penalties amount	$ 7,000	$ 7,000

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INCOME TAXES (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Tax [Line Items]
Provision for income taxes	$ (13)	$ (38)
USA [Member]
Income Tax [Line Items]
Applicable income tax rate	35.00%	35.00%
PRC [Member]
Income Tax [Line Items]
PRC enterprise tax rate	25.00%

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ORGANIZATION AND BASIS OF PRESENTATION (Liquidity And Capital Resources) (Details) (USD $)	1 Months Ended	3 Months Ended				3 Months Ended											3 Months Ended	12 Months Ended
	May 06, 2013	Mar. 31, 2013	Mar. 31, 2012	Apr. 30, 2013	Dec. 31, 2012	Mar. 31, 2013 Sanmen Local Bank [Member]	Dec. 31, 2012 Sanmen Local Bank [Member]	Mar. 31, 2012 Sanmen Local Bank [Member]	Mar. 31, 2013 Sanmen Branch Of CITIC Bank [Member]	Nov. 30, 2012 Sanmen Branch Of CITIC Bank [Member]	May 31, 2012 Sanmen Branch Of CITIC Bank [Member]	Mar. 31, 2013 Taizhou Bank [Member]	Feb. 28, 2013 Taizhou Bank [Member]	Dec. 31, 2012 Taizhou Bank [Member]	Mar. 31, 2013 China Everbright Bank [Member]	Dec. 31, 2012 China Everbright Bank [Member]	Mar. 31, 2013 Jonway Group [Member]	Dec. 31, 2012 Jonway Group [Member]	Feb. 28, 2013 Jonway Group [Member] Taizhou Bank [Member]	Dec. 31, 2012 Jonway Group [Member] Taizhou Bank [Member]	Mar. 31, 2013 Jonway Group [Member] China Everbright Bank [Member]	May 06, 2013 Minimum [Member]	Mar. 31, 2013 Minimum [Member]	Dec. 31, 2012 Minimum [Member] Taizhou Bank [Member]	Mar. 31, 2013 Minimum [Member] Jonway Group [Member]	May 06, 2013 Maximum [Member]	Mar. 31, 2013 Maximum [Member]	Dec. 31, 2012 Maximum [Member] Taizhou Bank [Member]	Mar. 31, 2013 Maximum [Member] Jonway Group [Member]
Short-term Debt [Line Items]
Line of credit, borrowing capacity								$ 800,000	$ 10,900,000		$ 23,800,000			$ 4,000,000		$ 8,900,000
Line of credit, amount outstanding							800,000		5,700,000			4,000,000			9,400,000		13,600,000		800,000	1,600,000	4,700,000
Line of credit, annual interest rate																	6.90%	6.51%
Line of credit, amount repaid						800,000											800,000	9,300,000
Short term loans		13,570,000		4,400,000	8,754,000					72,000		1,588,000	1,600,000	1,585,000
Payment of short term debt		817,000	852,000
Interest rate										6.60%			8.46%	8.06%										8.06%	6.00%			8.46%	8.46%
Civil penalties amount																						6,000	6,000			7,000	7,000
Maximum amount of penalties	$ 17,350,000	$ 17,350,000

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INVESTMENT IN JOINT VENTURES (Summary of Financial Information) (Details) (USD $) In Thousands, unless otherwise specified				3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Mar. 31, 2013 Shanghai Zapple [Member]	Dec. 31, 2012 Shanghai Zapple [Member]	Mar. 31, 2013 ZAP Hangzhou [Member]	Dec. 31, 2012 ZAP Hangzhou [Member]
Subsidiary or Equity Method Investee [Line Items]
Assets	$ 117,667	$ 115,964	$ 116,707		$ 1,472	$ 1,476	$ 1,682
Liabilities	92,344	87,017			867	33	118
Revenues						$ 81	$ 922

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies)

3 Months Ended

Mar. 31, 2013

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration of Credit Risk

Concentration of Credit Risk

The Company's operations are all carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with one high credit quality financial institution. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway's facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway's facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company's business, financial condition and results of operations.

Revenue Recognition

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

- Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

- Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.

- Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company's customary shipping terms are FOB shipping point.

- Collectability is reasonably assured. The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-based compensation

Stock-based compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the "Black-Scholes model"). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, Accounting for Uncertainty in Income Taxes defines uncertainty in income taxes and the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

United States federal, state and local income tax returns prior to 2009 are not subject to examination by tax authority.

Foreign Currency Translation

Foreign Currency Translation

The Company and its wholly owned subsidiary/investments, maintain their accounting records in United States Dollars ("US$") whereas Jonway Auto maintains its accounting records in the currency of Renminbi ("RMB"), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto's principal country of operations is the PRC. The financial position and results of our operations are determined using RMB, the local currency, as the functional currency. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder's equity as "Accumulated Other Comprehensive Income."

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	March 31, 2013 December 31, 2012
Balance sheet items, except for share capital, additional	$ 1=RMB 6.26660 $1=RMB 6.3090
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.27690 $1=RMB 6. 3079
and cash flows for the periods

Loss per Share

Loss per Share

Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company's potentially dilutive shares, which include outstanding common stock options convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share.

Cash and cash equivalents

Cash and cash equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the company and are comprised of investments having maturities of three months or less when purchased. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents

Restricted Cash

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway's banks. To issue these bank acceptance notes to Jonway's suppliers, the banks require a deposit of 50% or 100% of the full amount of such notes which are payable within 6 months from issuance. Upon the maturity date, restricted funds will be used to settle the bank acceptance notes. The restricted cash as shown in the consolidated balance sheets is strictly used by Jonway Auto which is based in China against the bank notes provided by the various Chinese banks that are providing the credit facilities or loans. The credit facilities and loans are used primarily to fund working capital and support the operating losses incurred by Jonway Auto.

Fair value of financial instruments

Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. Accounting standards establish a three level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair values. For certain of the Company's financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The three levels of inputs are defined as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management's best estimate of fair value.

The Company records certain assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States. Generally assets are measured at fair value on a nonrecurring basis as a result of impairment changes. Fair value was estimated based on discounted cash flow. Assets measured at fair value on a nonrecurring basis for the period ended March 31, 2013 are summarized below (in thousands):

		December 31, 2012
Assets		Level 1	Level 2	Level 3		Fair Value Measurements
Long-lived assets- 3-door SUV mold	(1)			$	2,560	$	2,560

(1) Included in "Property, plant and equipment, net" on the face of condensed consolidated balance sheets. The original carrying value was $5.12 million. The Company recognized impairment charges of $2.56 million (included in "impairment loss of long-lived assets" on the face of consolidated statements of operations and comprehensive loss) for the year December 31, 2012 . These charges were related to the impairment in the 3-door SUV mold equipment used in the Jonway Auto segment (See Note 2-Accounting for long-lived assets).

The Company believes the reported carrying amounts of its current assets and current liabilities approximate fair value, based upon the short-term nature of these accounts. The fair value of the Company's investment in joint ventures and its receivable from related parties are impracticable to determine.

Accounts Receivable and Notes Receivable

Accounts Receivable and Notes Receivable

Accounts and note receivable consist mainly of receivables from our established dealer network. A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit-related losses to date. The allowance for doubtful accounts was $80,000 and $201,000 at March 31, 2013 and December 31, 2012, respectively

Inventories

Inventories

Most of the inventory on the balance sheet consisting of $9,619 million is in Jonway Auto in China, ZAP's Inventories of approximately half a million out of the total consist primarily of vehicles, both gas and electric, parts and supplies, and finished goods and are carried at the lesser of lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company's products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

As of March 31, 2013, ZAP has reserved $545,908 of its vehicle inventory that is held by Steve Schneider on River Road property that was being leased by ZAP from former ZAP Co-CEO and current ZAP Director. Steven Schneider. Mr. Schneider took this inventory without ZAP authorization before and after an illegal and failed attempt to take control of ZAP. He refuses to release the inventory until a lawsuit he has filed against the Company is heard by the courts. During the attempted takeover, $116,090 was diverted to a bank account set up by a former employee and board directors. To date, these funds have not been recovered.

Property and equipment

Property and equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements which are almost all in Jonway Auto in China. ZAP does not own any property or any significant amount of equipment in the U.S. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset's estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized. Estimated useful lives are as follows:

Machinery and equipment	5-10 years (Jonway 10 years)
Computer equipment and software	3-5 years
Office furniture and equipment	5 years
Vehicles	5 years
Leasehold improvements	10 years or life of lease,
	whichever is shorter
Building and improvements	20-30 years (Jonway 20 years)

Land use Rights

Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and can not be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as "ownership". Land use rights are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight -line method. Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

Long-lived Assets

Long-lived assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value. There are no impairment losses of long-lived assets for the periods ended March 31, 2013 and $2.6 million of impairment loss for the year ended December 31, 2012, respectively.

Intangible Assets-Finite

Intangible Assets-Finite

Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 2 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

Goodwill and Intangible Assets-Indefinite

Goodwill and Intangible Assets - Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles. The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year. The Company performs its annual impairment test in the fourth quarter of each year. Calculating the fair value of the reporting units requires significant estimates and assumptions by management. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Product warranty costs

Product warranty costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall. The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

Jonway provides a 2-year or 60,000 kilometer warranty for its SUV products. Jonway records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

Comprehensive loss

Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders' equity that are not reflected in the consolidated statements of operations. The Company's comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments.

Risks and Uncertainties

Risks and Uncertainties

A substantial portion of the company's operations are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The company's results may be adversely affected by interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters ("ASU 2013-05"). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, ASU 2013-05 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-02 becomes effective for the company prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material effect on the Company's consolidated financial statements.

In April 2013, the FASB has issued Accounting Standards Update (ASU) No. 2013-4, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is fixed at the Reporting Date. ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among it co-obligors and any additional amount the reporting entity expects to pay on behalf of it co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this standard to have a material impact on the Company's unaudited condensed consolidated financial position and results from operations.

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DISTRIBUTION AGREEMENTS (Tables)

3 Months Ended

Mar. 31, 2013

DISTRIBUTION AGREEMENTS [Abstract]

Schedule of Distribution Agreements

	March 31, 2013		December 31, 2012
Better World Products-related party	$	2,160	$	2,160
Jonway Products		14,400		14,400
		16,560		16,560
Less amortization		(5,641)		(5,281)
	$	10,919	$	11,279

Schedule of Estimated Future Amortization Expense Related to Agreements

Year ended December 31,
2013	$	1,080
2014		1,440
2015		1,440
2016		1,440
2017		1,440
Thereafter		4,079
Total	$	10,919

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INVESTMENT IN JOINT VENTURES (Narrative) (Details)	3 Months Ended		12 Months Ended	3 Months Ended		12 Months Ended			3 Months Ended		12 Months Ended
	Mar. 31, 2013 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2012 USD ($)	Mar. 31, 2013 ZAP Hangzhou [Member] USD ($)	Mar. 31, 2012 ZAP Hangzhou [Member] USD ($)	Dec. 31, 2012 ZAP Hangzhou [Member] USD ($)	Dec. 11, 2009 ZAP Hangzhou [Member] USD ($)	Dec. 11, 2009 ZAP Hangzhou [Member] ZAP [Member] USD ($)	Mar. 31, 2013 Shanghai Zapple [Member] USD ($)	Mar. 31, 2012 Shanghai Zapple [Member] USD ($)	Dec. 31, 2012 Shanghai Zapple [Member] USD ($)	Nov. 30, 2011 Shanghai Zapple [Member] CNY	Dec. 11, 2009 Better World [Member] ZAP Hangzhou [Member]	Nov. 30, 2011 ZAP Hangzhou [Member] Shanghai Zapple [Member] CNY	Dec. 11, 2009 Zhejiang UFO Automobile [Member] ZAP Hangzhou [Member]	Nov. 30, 2011 Zhejiang UFO Automobile [Member] Shanghai Zapple [Member] CNY
Schedule of Equity Method Investments [Line Items]
Ownership percentage								37.10%					37.50%	50.00%	25.00%	50.00%
Original registered capital of joint venture												20,000,000
Joint venture, capital investment							3,000,000	1,100,000						3,000,000		5,000,000
Equity method investment losses	$ 485,000	$ 119,000	$ 403,000	$ (24,000)	$ (51,000)	$ (123,000)			$ (461,000)	$ (68,000)	$ (280,000)

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PROPERTY, PLANT AND EQUIPMENT, NET (Schedule Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]
Land use right	$ 10,250	$ 10,217
Software	106	97
Intangible assets	10,356	10,314
Less: accumulated amortization	(570)	(547)
Intangible assets, net	$ 9,786	$ 9,767

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (3,915)	$ (4,512)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based employee compensation	85	671
Stock-based compensation for services		105
Depreciation and amortization	1,605	1,799
Amortization of Distribution fees	360
Inventory Reserve	(74)	95
Provision for (recovery of) doubtful accounts	(6)	(3)
Loss from joint venture and other investmesnts	485	119
Deferred tax benefit	(13)	(38)
Amortization of debt discount	391
Changes in assets and liabilities: (net of acquisition )
Accounts receivable	(617)	34
Notes Receivable	919	729
Inventories	1,673	(357)
Prepaid expenses and other assets	(1,582)	(723)
Due from related parties	(518)
Accounts payable	(764)	299
Accrued liabilities	(385)	(876)
Taxes payable	320	(245)
Advances from customers	(1,758)	2,625
Due to related parties		(1,284)
Other payables	(912)	(363)
Net cash used in operating activities	(4,706)	(1,925)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(335)	(597)
Cash flows used in investing activities:	(335)	(597)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable	13,316	670
Proceeds from short term loans	5,558	522
Change in restricted cash	(4,197)	266
Repayment to related parties		(2,001)
Repayment of notes payable	(9,167)
Repayment of short term loans	(817)	(852)
Cash provided by financing activities	4,693	(1,395)
Effect of exchange rate changes on cash and cash equivalents	(103)	(20)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(451)	(3,937)
CASH AND CASH EQUIVALENTS, beginning of period	1,656	5,859
CASH AND CASH EQUIVALENT, end of period	1,205	1,922
Supplemental disclosure of cash flow information:
Cash paid during period for interest	197	264
Cash paid during period for taxes

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INTANGIBLE ASSETS, NET AND GOODWILL

3 Months Ended

Mar. 31, 2013

INTANGIBLE ASSETS, NET & GOODWILL [Abstract]

INTANGIBLE ASSETS, NET & GOODWILL

5- INTANGIBLE ASSETS, NET & GOODWILL

The goodwill and intangible assets at March 31, 2013 and 2012 are summarized as follows:

			Net Book		Amortization and cumulated translation adjustments ("CTA")			Net Book
	Useful Life		Value		for the three months ended			Value
	(In Years)		12/31/2012		March 31, 2013			03/31/2013
Patents and Trademarks		7	$	52	$	(5	)	$	47
Customer Relationships		8.5		600		(9	)		591
Developed Technology		7		1,567		(58	)		1,509
In Process Technology	(a)			183		-			183
Trade name	(a)			2,169		--			2,169
Intangibles			$	4,571	$	(72	)	$	4,499
Goodwill			$	324	$	-		$	324

(a) The in process technology and trade name have been determined to have an indefinite life.

Amortization expense was approximately $70,000 for the three months ended March 31, 2013 and 2012, respectively.

As of March 31, 2013, estimated future amortization expense for intangibles assets, subject to amortization, is as follows (in thousands):

Year	Amortization Expense
2013	$	318
2014		424
2015		407
2016		402
2017		402
Thereafter		160
	$	2,113

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SEGMENT REPORTING (Narrative) (Details) (Customer Concentration Risk [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk percentage	99.00%
Concentration risk amount	$ 14.2

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INVESTMENT IN JOINT VENTURES (Tables)

3 Months Ended

Mar. 31, 2013

INVESTMENT IN JOINT VENTURES [Abstract]

Schedule Of Joint Venture's Carrying Amount

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011		554			736			1,290
Less: investment loss		(123	)		(280	)		(403	)
CTA		6			5			11
Balance as of December 31, 2012	$	437		$	461		$	898
Less: Investment loss		(24	)		(461	)		(485	)
CTA		4			--			4
Balance as of March 31, 2013		417			--			417

Schedule Of Losses From Joint Ventures

	March 31, 2013		December 31, 2012
Shanghai Zapple
Total assets	$	--	$	1,472
Total liabilities		--		867
Revenue		--		-
Hangzhou ZAP
Total assets		1,476		1,682
Total liabilities		33		118
Revenue	$	81	$	922

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INVENTORIES, NET (Schedule of Inventory Reserve) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
INVENTORIES, NET [Abstract]
Beginning balance	$ 2,325
Current provision for Jonway Auto
Current provision for inventory ZAP	(74)	95
Ending balance	$ 2,261

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 15 - SUBSEQUENT EVENTS

Legal Proceedings

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court of the District of Columbia as United States v. Zap; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration ("NHTSA") about the vehicle recalls; and was uncooperative and evasive with NHTSA. The Company has discontinued the sale of the Zebra vehicles after these 2008 models. The 2008 Zebra vehicles were manufactured by a company called, Fulu, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which among other things, would impose penalties of $6,000 to $7,000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.