a51214210q.htm

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, 2014

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 12, 2014, there were 392,702,074 shares outstanding of the registrant’s common stock.

INDEX

		Page No.

PART I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013	3

	Condensed Consolidated Statements of Operations and Comprehensive loss for the three months ended March 31, 2014 and 2013	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantative and Qualitative Disclosures about Market Risk	28

Item 4.	Controls and Procedures	28

PART II. Other Information

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

SIGNATURES		32

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31,		December 31,
ASSETS	2014		2013

Current assets:

Cash and cash equivalents	$	1,918	$	2,629
Restricted Cash		7,790		10,758
Notes receivable		-		185
Accounts receivable		5,026		5,351
Inventories, net		7,928		8,034
Prepaid expenses and other current assets		471		1,007
Total current assets		23,133		27,964

Property, plant and equipment, net		46,627		48,004
Land use rights, net		9,864		10,008
Other assets:
Distribution fees for Jonway Products and
Better Worlds Products,net		9,479		9,839
Intangible assets, net		4,137		4,280
Goodwill		331		334
Due from related party		3,163		6,061
Deposits and other assets		590		543
Total other assets		17,700		21,057
Total assets	$	97,324	$	107,033

See accompanying notes to the unaudited condensed consolidated financial statements

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31,			December 31,
	2014			2013

LIABILITIES AND EQUITY
Current liabilities:
Short term loans	$	14,116		$	14,961
Convertible Bond		1,244			1,153
Senior convertible debt		20,679			20,679
Accounts payable		20,828			23,648
Accrued liabilities		7,609			7,874
Notes payable		12,494			15,695
Advances from customers		4,645			5,233
Taxes payable		791			1,704
Due to related party		4,786			2,409
Other payables		3,458			3,574
Total current liabilities		90,650			96,930

Long term liabilities:
Accrued liabilities and others		918			752
Total liabilities		91,568			97,682

Commitments and contingencies

ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized;
302,518,002 and 302,518,002 shares issued and outstanding
at March 31, 2014 and December 31, 2013, respectively		232,659			231,125
Accumulated other comprehensive income		1,647			1,707
Accumulated deficit		(235,794	)		(232,417	)
Total ZAP shareholders’ equity		(1,488	)		415
Non-controlling interest		7,244			8,936
Total equity		5,756			9,351
Total liabilities and equity	$	97,324		$	107,033

See accompanying notes to the unaudited condensed consolidated financial statements

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,
	2014			2013

Net sales	$	6,821		$	14,365
Cost of goods sold		(7,792	)		(13,615	)
Gross profit		(971	)		750

Operating expenses:
Sales and marketing		734			1,433
General and administrative		2,064			1,976
Research and development		186			150
Total operating expenses		2,984			3,559

Loss from operations		(3,955	)		(2,809	)

Other income (expense):
Interest expense, net		(876	)		(822	)
Loss from equity in joint venture		-			(485	)
Other Income		124			188
Total income (expense)		(752	)		(1,119	)
Loss before income taxes		(4,707	)		(3,928	)
Income tax benefit(expense)		(304	)		13
Net Loss	$	(5,011	)	$	(3,915	)
Less: loss attributable to non-controlling interest		1,634			1,155
Net loss attributable to ZAP’s common shareholders	$	(3,377	)	$	(2,760	)

Net Loss		(5,011	)		(3,915	)
Other Comprehensive income(loss)
Foreign currency translation adjustments		(118	)		206
Other comprehensive income(loss)		(118	)		206
Total comprehensive income (loss)		(5,129	)		(3,709	)
Less : Comprehensive loss attributable to non-controlling interest		1,692			1,054
Comprehensive loss attributable to ZAP’s common shareholders	$	(3,437	)	$	(2,655	)

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			302,518

See accompanying notes to the unaudited condensed consolidated financial statements

ZAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three months ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(5,011	)	$	(3,915	)
Adjustments to reconcile net loss to cash (used in) operating activities:
Stock-based employee compensation		34			85
Depreciation and amortization		2,079			1,965
Provision for (recovery of) doubtful accounts		2			(6	)
Inventory reserve		(32	)		(74	)
Loss from joint venture and other investments		-			485
Deferred tax expense(benefit)		304			(13	)
Amortization of debt discount		91			391
Changes in assets and liabilities:
Accounts receivable		282			(617	)
Notes Receivable		185			919
Inventories		73			1,673
Prepaid expenses and other assets		177			(1,582	)
Due from related parties		2,887			(518	)
Accounts payable		(2,666	)		(764	)
Accrued liabilities		(52	)		(385	)
Taxes Payable		(901	)		320
Advances from customers		(550	)		(1,758	)
Due to related parties		2,451			-
Other payables		(154	)		(912	)
Net cash used for operating activities		(801	)		(4,706	)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property and equipment		(480	)		(335	)
Net cash flows used in investing activities:		(480	)		(335	)

See accompanying notes to the unaudited condensed consolidated financial statements

ZAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three months ended March 31,
	2014			2013


CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash		2,910			(4,197	)
Proceeds from notes payable		6,643			13,316
Proceeds from short term loans		2,109			5,558
Proceeds from equity investment		1,500			-
Repayments of notes payable		(9,748	)		(9,167	)
Payments of short term loans		(2,837	)		(817	)
Net cash provided by financing activities		577			4,693
Effect of exchange rate changes on cash and cash equivalents		(7	)		(103	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(711	)		(451	)
CASH AND CASH EQUIVALENTS, beginning of period		2,629			1,656
CASH AND CASH EQUIVALENTS, end of period	$	1,918		$	1,205

Supplemental disclosure of cash flow information:
Cash paid during period for interest	$	314		$	197
Cash paid during period for income taxes	$	-		$	-

See accompanying notes to the unaudited condensed consolidated financial statements

ZAP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2014

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”).

The principal activities of Jonway are the production and sale of automobile spare parts and the production and distribution of SUVs and minivans in China using the consigned UFO license from an affiliate of Jonway Group.

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 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 2014, 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 three wholly-owned subsidiaries, namely, Taizhou Selling Co., Ltd. focusing on vehicles marketing and distribution, 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 unaudited condensed 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, 2014 and 2013 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.

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, 2014 and 2013 may not be indicative of the results that may be expected for the year ending December 31, 2014 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, 2013 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2014 (our “10-K”).

LIQUIDITY AND RESOURCES

In assessing our liquidity, we monitor and analyze our cash on-hand 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 November 2013, we were approved up to an aggregate of $24.3 million of a credit line, with the credit exposure of $6.3 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. In March 2014, the credit exposure increased by $1.0 million to $7.3 million. When drawn down, the credit line is secured by land and buildings owned by Jonway and guaranteed by the related party Jonway Group. Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million in November 2013. The annual interest rate is 6.6%, and the loans are due in November 2014. In March 2014, Jonway borrowed an additional one year short-term loan of $1.0 million. The annual interest rate is 7.08% and the loan is due in March 2015. We have also drawn down $2.7 million in the form of notes payable as of March 31, 2014. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due on April 24 and April 29, 2014. As of March 31, 2014, the credit exposure of $7.3 million has been fully used. The credit line expires in November 2015.

In December 2012, we were approved up to an aggregate of $4.1 million of a credit line from Taizhou Bank. This credit line was reduced to $2.4 million in early 2014 when it was renewed. This credit line was guaranteed by related parties. As of March 31, 2014, the total outstanding under this credit line was $1.1 million. The annual interest rate is 8.89%.The loans are due separately in May and August 2014. A credit exposure of $1.0 million was used in the form of notes payable of $2.0 million with restricted cash of $1.0 million being deposited with the bank. As of March 31, 2014, the total credit exposure of $2.1 million has been used.

In December 2013, we were approved up to an aggregate of $9.1 million of a credit line from Everbright Bank. This credit line can only been used in the form of notes payable with 50% restricted cash deposited. Thus, we were approved a credit exposure of $4.5 million. This credit line was guaranteed by the shareholder Wang Huaiyi, as well as a building and land use right at the carrying value of $2.1 million. As of March 31, 2014, $7.9 million was drawn down as notes payable in which $1.2 million was without a restricted cash deposit. The amount of restricted cash deposited with the bank was $3.4 million. As of March 31, 2014, the credit exposure of $4.5 million has been fully used. The credit line expires in December 2014.

In December 2013, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC). This credit line was secured by land and buildings owned by Jonway and guaranteed by related parties. As of March 31, 2014, the total outstanding loan under this credit line was $5.7 million with$0.8 million of restricted cash deposited with the bank. The annual interest rates are from 5.6% to 7.2%. The loans are due in various dates from June 2014 to November 2014. As of March 31, 2014, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in December 2014.

As of March 31, 2014, Jonway had $14.1 million in short term bank loans outstanding, which are borrowed from the above stated China-based banks with interest rates ranging from 5.60% to 8.89% per annum and expire at various times through March 2015.

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 March 31, 2015 in the event that we require additional liquidity. In addition, CEVC (China Electric Vehicle Corporation) would likely renew the convertible note 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.

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, warranty costs, stock based compensation, 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.

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.

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, 2014	December 31, 2013

Balance sheet items, except for share capital, additional	$ 1=RMB 6.1632	$1=RMB 6.1122
paid in capital and retained earnings

Amounts included in the statements of operations	$ 1=RMB 6.0969	$1=RMB 6. 1171
and cash flows for the periods

Recent Accounting Pronouncements

There have been no new accounting pronouncements that would have a material impact on the financial position of the Company.

NOTE 3– INVENTORIES, NET

Inventories are summarized as follows (in thousands):

	March 31, 2014			December 31, 2013

Work in Process	$	2,474		$	2,228
Parts and supplies		3,618			2,906
Finished goods		3,713			4,881
		9,805			10,015
Less - inventory reserve		(1,877	)		(1,981	)
Inventories, net	$	7,928		$	8,034

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

	March 31, 2014			December 31, 2013
Balance opening period		1,981		$	2,325
Current provision for Jonway Auto		-			(529	)
Current provision for inventory ZAP		(104	)		185
Balance end of period		1,877		$	1,981

NOTE 4– 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 Company’s investment in the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total

Balance as of December 31, 2012	$	437		$	461		$	898
Less: investment loss		(438	)		(461	)		(899	)
CTA		1			--			1
Balance as of December 31, 2013		--			--			--
Less: Investment loss		--			--			--
CTA		--			--			--
Balance as of March 31, 2014	$	--		$	--		$	--

The carrying amount of the Joint Venture investment had been written down to $0 as of December 31, 2013. The Company recorded a loss of $0 and $24,000 in ZAP Hangzhou for the three months ended March 31, 2014 and 2013, respectively. Due to the suspension of Shanghai Zapple operations, the company recorded a loss of $0 and $461,000 in Shanghai Zapple for the three months ended March 31, 2014 and 2013 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, 2014		December 31, 2013
Shanghai Zapple
Total assets	$	--	$	--
Total liabilities		--		--
Revenue		--		--
Hangzhou ZAP
Total assets		1,217		1,346
Total liabilities		340		359
Revenue	$	--	$	83

NOTE 5 –LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

In November 2013, we were approved up to an aggregate of $24.3 million of a credit line, with the credit exposure of $6.3 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. In March 2014, the credit exposure increased by $1.0 million to $7.3 million. When drawn down, the credit line is secured by land and buildings owned by Jonway and guaranteed by the related party Jonway Group. Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million in November 2013. The annual interest rate is 6.6%, and the loans are due in November 2014. In March 2014, Jonway borrowed one year short-term loan of $1.0 million. The annual interest rate is 7.08% and the loan is due in March 2015. We have also drawn down $2.7 million in the form of notes payable as of March 31, 2014. We deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due on April 24 and April 29, 2014. As of March 31, 2014, the credit exposure of $7.3 million has been fully used. The credit line expires in November 2015.

In December 2012, we were approved up to an aggregate of $4.1 million of a credit line from Taizhou Bank. This credit line was reduced to $2.4 million in early 2014 when it was renewed. This credit line was guaranteed by related parties. As of March 31, 2014, the total outstanding under this credit line was $1.1 million. The annual interest rate is 8.89%.The loans are due separately in May and August 2014. A credit exposure of $1.0 million was used in the form of notes payable of $2.0 million with restricted cash of $1.0 million being deposited with the bank. As of March 31, 2014, a total credit exposure of $2.1 million has been used.

In December 2013, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC). This credit line was secured by land and buildings owned by Jonway and guaranteed by related parties. As of March 31, 2014, the total outstanding loan under this credit line was $5.7 million with $0.8 million of restricted cash deposited with the bank. The annual interest rates are from 5.6% to 7.2%. The loans are due in various dates from June 2014 to November 2014. As of March 31, 2014, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in December 2014.

Short term debt

In November 2013, Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million from CITIC. The annual interest rate is 6.6%, and the loans are due in November 2014. In March 2014, Jonway borrowed $0.98 million from CITIC Bank. The loan expires in March 2015 and the annual interest rate is 7.08%. The loans are secured by a Maximum Amount Mortgage Contract between Jonway and CITIC dated November 11, 2013, in which a land use right and a building with a total carrying amount of $6.2 million as of March 31, 2014 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.

In July, August and November 2013, the company borrowed a total of $2.1 million of short term loans at interest rates of 8.46% and 8.89% from Taizhou Bank. The loans are guaranteed by related parties including Jonway Group, the shareholder Wang Huayi and other individuals. Loans of $1.3 million were due in January and February 2014, and were repaid when due. The remaining balance of $0.8 million will be due in May 2014. Jonway borrowed a short-term loan of $0.3 million in February 2014 at the annual interest rate of 8.89% which is due in August 2014.

The Company also borrowed loans from Industrial and Commercial Bank of China (ICBC) during 2013. In June 2013, Jonway borrowed a one year short-term loan of $1.1 million. The annual interest rate was 6.9%. In August 2013, Jonway borrowed a 6 months short-term loan of $0.8 million. The annual interest rate was 5.6%. The loan was repaid when due in February 2014. In August 2013, Jonway borrowed a one year short-term loan of $ 1.1 million. The annual interest rate was 6.9%. In September 2013, Jonway borrowed a 6 months short-term loan of $0.7 million. The annual interest rate was 5.6%. The loan was repaid when due in March 2014. In November 2013, Jonway borrowed a one year short term loan of $1.5 million. The annual interest rate was 7.2%. In December 2013, Jonway borrowed a one year short term loan of $1.1 million. The annual interest rate was 7.2%.In March 2014, Jonway borrowed a 6 months short-term loan of $0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate is 5.6% and is due in September 2014. These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and Co-CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $3.65 million with ICBC.

The weighted average annual interest rate during 2013 was 7.04%. In the first quarter of 2014, the weighted average annual interest rate was 6.95%.

(in thousands)

	3/31/2014		12/31/2013
Loan from CITIC bank	$	7,301		6,381
Loan from ICBC		5,656		6,381
Loan from Taizhou Bank		1,136		2,127
Loan from Pay-Ins Prem		23		72
	$	14,116	$	14,961

As of March 31, 2014, the Company has bank acceptance notes payable in the amount of $12.5 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, 2014, the restricted cash for the notes was $7.0 million.

Bank acceptance notes – 3 to 6 month term for each note issued (in thousands)

	3/31/2014		12/31/2013
a) Bank acceptance notes payable to China Everbright bank	$	7,870	$	8,891
b) Bank acceptance notes payable to Taizhou bank		1,947		3,927
c) Bank acceptance notes payable to CITIC bank		2,677		2,700
d) Bank acceptance notes payable to ICBC		-		177
	$	12,494	$	15,695

Notes payable to China Everbright bank have various maturity dates from May 2014 to September 2014. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.1 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.

Notes payable to Taizhou bank have various maturity dates from April 2014 to August, 2014. The Company is required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.

Notes payable to CITIC bank will be due in April 2014. The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

Notes payable to ICBC were due in March 2014 and repaid. The Company was required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

NOTE 6- CONVERTIBLE BOND

On June 12, 2013, the Company signed a convertible bond agreement, pursuant to which a Convertible Bond would be put in place to fund the formation of JAZ (Jonway and ZAP) from the ZAP Hangzhou Joint Venture that was formed in 2010 in China, Hangzhou. The Convertible Bond was to be funded at US$2 million with the option to convert to JAZ shares upon listing on the AIM market at a discount of 30% of the IPO price, and if no AIM listing will be achieved within the duration of Bond period then the Convertible Bond can be converted into ZAP shares at 30% below market price based on the average trading prices of the previous 120 days after notification by bond holder for shares conversion in whole or in part of the bond sum. The Convertible Bond bears interest at 12% per annum payable in arrears in full. As of March 31, 2014, the Company received $1.7 million ($1.50 million net of interest) of $2 million, leaving $300,000 yet to be received. A total of $0.18 million in amortization was recorded with the remaining balance of $0.55 million of the discount was offset against the Company’s equity account. The Bond has not been fully funded and the remaining $300,000 may not be forthcoming and its settlement date is uncertain. Therefore, the final amount of the Bond will not be determined until either the $300,000 is received or the principal amount of the Bond is reduced to $1.7 million. As of March 31, 2014, only the $1.7 million that has been funded is accounted for in the accompanying consolidated financial statements. Ratification by the Company’s board of directors of the final amount of the Bond is pending the definitive payment or nonpayment of the remaining$300,000.

On March 30, 2014 and April 22, 2014 a bondholder requested an early conversion of $300,000 of the principle balance of the Bond into shares of the Company’s common stock. The Company permitted the bondholder to exercise his conversion rights subject to the terms and conditions of an agreement dated April 23, 2014 which, among other things, calculated conversion prices for the Company’s common stock based upon the conversion terms set forth in the Bond. Till our report date, the common stock hasn’t been issued yet and will be issued in the 2nd quarter of 2014.

NOTE 7 – SEGMENT REPORTING

Operating Segments

In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, ZAP (Consumer Product) and ZAP Hong Kong. The Jonway Vehicles segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles, minivans 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 2014. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters. 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 before income taxes. Segment results are summarized as follows (in thousands):

							Voltage		Advanced
	Jonway						Vehicles		Technology		ZAP Hong
	Auto			ZAP			Car outlet		Vehicles		Kong		Total

For the three months ended March 31, 2014:
Net sales	$	6,733		$	88		$	-	$	-	$	-	$	6,821
Gross profit (loss)	$	(994	)	$	23		$	-	$	-	$	-	$	(971	)
Depreciation and amortization	$	1,423		$	656		$	-	$	-	$	-	$	2,079
Net profit (loss)	$	(3,334	)	$	(1,677	)	$	-	$	-	$	-	$	(5,011	)
Total assets	$	77,722		$	19,464		$	-	$	-	$	138	$	97,324


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 loss	$	(2,358	)	$	(1,605	)	$	-	$	48	$	-	$	(3,915	)
Total assets	$	94,227		$	22,884		$	179	$	377	$	-	$	117,667

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 $6.7 million of our revenues for the three months ended March 31, 2014 are from sales in China. Jonway Auto distributes its products to an established network of over 70 factory level dealers in China with one customer contributing 14% of our consolidated revenue. Approximately 99% or $14.2 million of our revenues for the three months ended March 31, 2013 are from sales in China. Jonway Auto distributed its products to an established network of over 70 factory level dealers in China with one customer contributing 11% of our consolidated revenue.

Supplier information

For the three months ended March 31, 2014 and 2013, approximately 99% or $7.7 million and 99% or $13.6 million of the consolidated cost of goods sold were purchased in China. For the three months ended March 31, 2014 and 2013, Haerbin Dongan Auto, Engine Manufacturing Co., Ltd., as the sole supplier of engines to Jonway, accounted for 29% and 21% of the total purchases, respectively.

NOTE 8– 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 (in thousands):
	3/31/2014		12/31/2013
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	2,130	$	4,973
JAZ		1,033		961
ZAP Hangzhou		-		127
Total	$	3,163	$	6,061



Amount due to related parties are follows (in thousands):
	3/31/2014		12/31/2013
Jonway Group	$	2,351	$	303
Jonway Motor Cycle		126		113
Taizhou Huadu		736		631
Shanghai Zapple		37		36
Ms. Lu		30		30
Betterworld		149		149
Cathaya Capital		1,357		1,147
Total	$	4,786	$	2,409

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, 2014 and 2013, Jonway made purchases from Jonway Group of $217,000 and $316,000.

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 (historical exchange rate):

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.

NOTE9- SHAREHOLDERS’ EQUITY

In February 2014, a binding letter of commitment in equity investment in ZAP was signed between ZAP and some investors in China. Based on the agreement, the investors agreed to invest $1,500,000-$2,000,000 to ZAP to pay for the buyback of the 2008 Xebras as mandated by the Department of Transportation. Also based on the agreement, upon receiving the investment, ZAP’s common shares will be issued. The strike price of the shares issued will be at $0.06 per share which is discounted from the average price of the last 60 days at the time the agreement was signed, which is approximately $0.09 per share, resulting in the issuance of 25 million shares for $1,500,000 and 33,333,333 shares if $2,000,000 was reached. As of March 31, 2014, ZAP has already received the cash investment of $1,500,000 and recorded in “common stock” on the condensed consolidated balance sheet. As of the report date, common shares have not been issued yet. The Company expects to issue these shares in the 2nd quarter of 2014. As of the report date, US$1.9 million of the $2 million has been received.

NOTE 10– LITIGATION

On March 13, 2014, the Company filed its own operative First Amended Cross-Complaint in the Cathaya Lawsuit (the “ZAP Cross-Complaint”) against Abdou and Schneider, alleging causes of action for (1) breach of fiduciary duty; (2) conversion; (3) imposition of a constructive trust; and (4) an accounting. By the ZAP Cross-Complaint, the Company is, among other things, pursuing Schneider and Abdou for return of inventory and assets that were removed from the Company’s warehouse, as well as cash that was redirected to another account.

The Court set January 15, 2015 as the trial date for all parties’ claims asserted in the Cathaya Lawsuit.

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 had 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 and the United States reached a settlement that is incorporated into a Consent Decree that was entered and approved by the U.S. District Court on July 17, 2013. Pursuant to the Consent Decree, ZAP agreed to initiate a buy-back program whereby it will offer to provide a refund of $3,100 to each eligible MY 2008 ZAP Xebra owner. The Consent Decree also contains notification and reporting requirements and requires ZAP to take specified actions regarding the disposition of repurchased vehicles and MY 2008 Xebras that remain in ZAP’s possession. In accordance with the Consent Decree, the Company mailed the required notification letters to registered vehicle owners and ZAP Xebra dealers, along with a Refund Request Form. The repurchase offer extends to 691 vehicles that have been sold by ZAP. As of March 25, 2014 ZAP had received 318 refund requests of which 311 were deemed eligible

Per the terms of the Consent Decree, ZAP was to repurchase the vehicles of all eligible owners who requested a refund by no later than December 31, 2013 or 30 days after an eligible owner’s refund request, whichever is later. The Company did not repurchase any owner vehicles by December 31, 2013. ZAP began repurchasing vehicles in March, 2014.

On April 7, 2014, ZAP and the United States who entered into an agreement to amend the Consent Decree wherein ZAP agreed to repurchase the vehicles of all eligible owners by no later than April 30, 2014.

On April 30, 2014, ZAP reported to NHTSA that the Company increased the number of vehicle owners it deemed eligible for a refund from 311 to 315 and that ZAP had either delivered or mailed full refund checks to 314 vehicle owners. The remaining vehicle owner requested the check be hand delivered on May 2, 2014 and received payment on that day.

Per the terms of the Consent Decree, ZAP has 30 days after it issues a refund to arrange for the pick up of a vehicle. As of May 12, 2014 the Company has picked up 263 vehicles and it plans on picking up remaining vehicles within the 30 day time frame. As of May 10, 2014 all payments have been remitted.

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

NOTE 11 – 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 $7.0 million and $7.7 million as of March 31, 2014 and 2013, respectively. The guarantee expires at variance dates from April 2014 through December 2014. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

NOTE 12 – SUBSEQUENT EVENTS

In May 2014, Jonway repaid $0.81 million of a short term loan to Taizhou Bank when they became due. In April 2014, Jonway partially repaid $0.56 million of a short term loan to CITIC Bank.

In May 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan expires in November 2014 and the annual interest rate is 8.89%.

In April 2014, Jonway borrowed $0.81 million of short term loan from Industrial and Commercial Bank of China (ICBC). The loan expires in April 2015 and the annual interest rate is 5.6%. Restricted cash of the same amount was deposited with the bank.

From April 2014 to May 2014, approximately $4.07 million of notes payable matured.

In April 2014, approximately $7.39 million of notes payable were issued. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with the bank. These notes payable expire in October 2014.

On April 29, 2014, the Company, Cathaya Capital L.P and Korea Yung (“Yung”) entered into an agreement (“Agreement”) to amend the terms of Yung’s Convertible Bond. The Agreement provides that in the event the Company is unable to make the required Bond payment to Yung on or before June 20, 2014, the Company will be required to provide Yung with written notice setting forth the Company’s proposal to extend the June 20, 2014 maturity date which proposal to subject to approval by Yung in her absolute discretion. The Agreement also provides that in the event either the Company or Zhejiang Jonway Automobile Co. Ltd. (“Jonway”) is a party to a change of control transaction or a sale of assets, the proceeds from such transactions, subject to applicable law, shall first be applied by the Company toward the Bond payments to Yung prior to payments to any other creditors of either the Company or Jonway. Lastly, the Agreement provides that in the event of the liquidation and dissolution of the Company, the Bond payments to Yung, in compliance with applicable law, shall have priority over payments to other of the Company’s unsecured creditors and that Cathaya Capital L.P. will subordinate to the Bond payments to Yung all preferences to which Cathaya Capital L.P. would be entitled upon such liquidation and dissolution.

Cathaya Operations Management Limited, China Electric Vehicle Corp and Ms. Lu have elected to convert the amounts recorded as due to related parties to common stock. The amount of $937,312 due to Cathaya Operations Management Limited and the amount of $30,231 due to Ms. Lu have been converted into 17,819,783 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 17,819,783 shares of common stock have been issued in April 2014.

Ms. Lu has elected to have her investment in the Convertible bond of $300,000 converted to 4,862,237 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 4,862,237 shares of common stock have been issued in May 2014.

. China Electric Vehicle Corporation (CEVC) has elected to convert the interest of $639,068 due on the $20.7 million convertible note to 6,439,552 shares of common stock at the average of the closing prices for each trading day during such fiscal quarter ended on (and including) the last trading day of such fiscal quarter. The 6,439,552 shares of common stock have been issued in April 2014.

. In March 2014, Jonway Group agreed to pay all of the outstanding mold expenses of the Minivan that is currently still outstanding, and in return ZAP will share half of the asset value and share the IPR (50%) of the Minivan with Jonway Auto. The Minivan was purchased by ZAP from a prior agreement between ZAP and Jonway Group which was signed on January 18, 2012. In return for ZAP receiving worldwide exclusivity for the sales, distribution, and product IPR rights for all current and future models of the compressed natural gas (“CNG”) versions of Jonway Auto’s Products, including, but not limited to, SUV, minivan, and all other models, the Company’s Board of Directors authorized on March 28, 2014 to issue 61,000,000 shares of common stock to the companies owned by the Co-CEO and shareholder Alex Wang, including 20,000,000 shares to Major Management Limited, 20,000,000 shares to Max Reliance Management Limited and 21,000,000 shares to New Dragon Management Limited. The 61,000,000 shares of common stock have been issued in April 2014.

In May 2014, ZAP issued 62,500 shares of common stock to Jeffery and Karen Bank, who paid $5,000 in cash on behalf of ZAP to address a lawsuit from Jackson Long.

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”.

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 March 2014, the Company launched Sparkee and Urbee in the EV product line. They are focused on addressing urban fleet market and ideal for daily errands. Urbee is well positioned as utility and delivery vehicle. The Company is going to adapt this smallest EV to support deliveries and service industries. Urbee is delivered to customers in the 2nd Quarter. These two additional small EV products complement the existing SUV which is China type approved and eligible for government reimbursements, and also the minivan EV which will be undergoing type approval this year. The Sparkee, Urbee and the Minivan all have both lead acid for the lower end market as well as lithium battery versions of the model to address the longer range and higher end market. The lithium battery versions can be configured for either as normal charge or fast charge in order to accommodate drivers who require a faster charge turnaround.

By partnering with Jonway Group’s motorcycle dealership network in China, Jonway Auto has been able to develop over thirty new dealers interested in the smaller Urbee and Sparkee EV. These qualified new dealers have placed committed orders of over 25,000 to be delivered over the next 12 months. These full electric small EVs are targeting smaller cities where consumers use the smaller EVs for daily commute or small load deliveries. Jonway Auto has begun volume manufacturing and delivery of these smaller EVs and will ramp from its current 500 vehicles per month to 1,500 vehicles per month by end of June 2014. The target is to be able to deliver 2000 per month towards latter part of 2014 in order to meet the delivery of 25,000 within 12 months. On litigation, Lu and ZAP filed a Demurrer to the Second Amended Cross-Complaint’s first, fifth, sixth, seventh and eighth claims. On March 3, 2014, the Court granted the Demurrer in its entirety and dismissed all claims asserted by Abdou and Schneider against Lu, without leave to amend. In addition, the Court dismissed all tort claims against ZAP. However, the Court’s ruling does not dismiss all claims against ZAP.The Abdou/Schneider claims against ZAP for unpaid compensation were not before the Court and therefore were not affected by the Court’s ruling and have not been dismissed. These contract-based claims are against ZAP only and do not allow for punitive damages.

ZAP intends to vigorously defend the Second Amended Cross-Complaint.

Regarding the recall of Xebras, mandated by Department of Transportation (DOT), on April 7, 2014 ZAP and the United States entered into an agreement to amend the Consent Decree wherein ZAP agreed to repurchase the vehicles of all eligible owners by no later than April 30, 2014.

On April 30, 2014 ZAP reported to NHTSA the Company increased the number of vehicle owners it deemed eligible for a refund from 311 to 315 and ZAP informed NHTSA that ZAP had either delivered or mailed full refund checks to all 314 vehicle owners. The remaining vehicle owner requested the check be hand delivered on May 2, 2014 and received payment on that day. These have all been completed,

In regard to Aptera,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,
	2014			2013
Statements of Operations Data:
Net sales		100.0	%		100.0	%
Cost of sales		(114.2)			(94.8)
Operating expenses		(43.7)			(24.8)
Loss from operations		(58.0)			(19.6)
Net loss attributable to ZAP		(49.5)			(19.2)

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, 2014 Compared to Quarter Ended March 31, 2013

Net sales for the quarter ended March 31, 2014 were $6.8 million as compared to $14.4 million for the quarter ended March 31, 2013.

Jonway Auto’s revenue for the quarter ended March 31, 2014 decreased by $7.5 million from $14.2 million for the quarter ended March 31, 2013 compared to $6.7 million in first quarter ended March 31, 2014. The sales volume decreased 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) China’s overall economic condition worsened during the quarter (the GDP increase rate for this quarter compared to same quarter in 2013 was 7.4%, which is unexpected low).

Our first quarter sales of our Advanced Technology segment sales decreased by $7,000 from $7,000 for the three months ended March 31, 2013 to $0 for the three months ended March 31, 2014. The decrease is primarily due to tight United States credit and general economic conditions negatively impacted our dealer sales in the 1st quarter of 2014. 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 has been effectively closed. We are discontinuing this business segment. We are currently settling our assets and inventory with Mr. Schneider, who is illegally holding these assets until his claims are settled.

In our Consumer Product segment first quarter sales decreased from $123,000 in the three months ended March 31, 2013 to $88,000 in the three months ended March 31, 2014. The decrease is primarily due to a bulk sale to a major customer of our ZAPPY 3 electric scooters was postponed until the 2nd Quarter of 2014.

Gross profit decreased by $1.7 million from a gross profit of $750,000 for the three months ended March 31, 2013 to a gross loss of $971,000 for the three months ended March 31, 2014. Our margins declined from 5.2% to -14.2%.

Jonway Auto’s gross profit decreased by $1.6 million from $649,000 in the first quarter of 2013 to a gross loss of $994,000 for the first quarter ended March 31, 2014. The decrease was primarily due to the change of sales mix. The portion of low end product increased in the 1st quarter of 2014 in comparing with the same period of last year.

Advanced Technology vehicles’s gross profit decreased by $51,000 from a gross profit of $51,000 for the period ended March 31, 2013 to $0 for the period ended March 31, 2014. No products sold in the 1st quarter of 2014.

We have closed the retail car lot in 2013.

The Consumer Products segment experienced a decrease in gross profit in the first quarter from $50,000 in 2013 to a gross profit of $23,000 in 2014. The decrease was due to a decrease in sales volume of our ZAPPY 3 Pro Flex.

Sales and marketing expenses decreased by $0.7 million from $1.4 million for the three month period ended March 31, 2013 to $0.7 million for the three months ended March 31, 2014. As a percentage of sales, the expense increased from 10.0% for the quarter ended March 31, 2013 to 10.7% for the quarter ended March 31, 2014 due to smaller sales volume compared to the same period in 2013 and an overall decrease in sales and marketing expenses.

General and administrative expenses increased by $95,000 from $2.0 million for the quarter ended March 31, 2013 to $2.1 million in 2014.

Research and development expenses increased by $36,000 from $150,000 for the first quarter ended March 31, 2013 to $186,000 for the first quarter ended March 31, 2014. The increase was primarily due to the development of a low-speed electric car, Urbee.

Interest expense increased by $54,000 from $822,000 in first quarter 2013 to $876,000 in the first quarter of 2014.

Other income decreased by $65,000 from $188,000 for the period ended March 31, 2013 to $123,000 for the period ended March 31, 2014. This amount mainly represents a decrease in the sales of metal scrap and subsidy income.

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, 2014, we believe that we will have sufficient liquidity required to conduct operations through March 31, 2015.

In January 2011, ZAP issued $19.0 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 without interest 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, 2015. 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 8% interest rate per annum will have a new maturity date of August 12, 2014.It is likely that we will be able to extend the maturity of the debt upon the expiration date.

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.

In the first three months of 2014, net cash used in operating activities was $0.8 million. Cash used in the first three months of 2014 was comprised of the net loss incurred for the three months of $5.0 million plus net non-cash expenses of $2.5 million and the net decrease of $1.7 million in operating assets and liabilities. In the first three months of 2013, net cash used for operating activities was $4.7 million.

Investing activities used cash of $480,000 and $335,000 in the first three months ended March 31, 2014 and 2013, respectively. Investing activities were used for the purchase of equipment.

Financing activities for the three months ended March 31, 2014 provided cash of $0.6 million compared with financing activities that provided cash of $4.7 million for the three months ended March 31, 2013. During the first three months of 2014, we provided cash of $8.8 million in short term loan and notes. We used cash of $12.6 million in repayment of notes and short term borrowings. The equity investment provided cash of $1.5 million. Restricted cash changed by $2.9 million for the three months ended March 31, 2014. For the three months ended March 31, 2013, financing activities provided cash of $4.7 million, which was mostly contributed by the short term loan and notes.

The Company had cash of $1.9 million at March 31, 2014 as compared to $2.6 million at December 31, 2013. The Company had working capital deficits of $67.5 million and $69.0 million for the periods ended March 31, 2014 and December 31, 2013 respectively.

In the event that we require additional liquidity, our Principal shareholders and related parties, Jonway Group, Alex Wang and Huaiyi Wang have agreed to provide the necessary support to meet our financial obligations through March 31, 2015. In addition, CEVC (China Electric Vehicle Corporation) would renew the convertible note and in the event that CEVC decides to call on the repayment, the repayment would 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.

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

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, 2013, 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 2014 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 March 3, 2014, the Court granted the Demurrer in its entirety and dismissed all claims asserted by Abdou and Schneider against Lu, without leave to amend. In addition, the Court dismissed all tort claims against ZAP. However, the Court’s ruling does not dismiss all claims against ZAP.

The Abdou/Schneider claims against ZAP for unpaid compensation were not before the Court and therefore were not affected by the Court’s ruling and have not been dismissed. These contract-based claims are against ZAP only and do not allow for punitive damages.

ZAP intends to vigorously defend the Second Amended Cross-Complaint.

The Court set January 15, 2015 as the trial date for all parties’ claims asserted in the Cathaya Lawsuit.

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 April 7, 2014, ZAP and the United States entered into an agreement to amend the Consent Decree wherein ZAP agreed to repurchase the vehicles of all eligible owners by no later than April 30, 2014.

Per the terms of the Consent Decree, ZAP has 30 days after it issues a refund to arrange for the pick up of a vehicle. As of May 12, 2014 the Company has picked up 263vehicles and it plans on picking up remaining vehicles within the 30 day time frame. As of May 10, 2014, all payments have been remitted.

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

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, 2013.

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.

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.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

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.

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, 2014	By: /s/ Alex Wang
	Name: Alex Wang

	Title: Co-Chief Executive Officer

	(Co-Principal Executive Officer).



Dated: May 15, 2014	By: /s/ Chuck Schillings
	Name: Chuck Schillings

	Title: Co-Chief Executive Officer

	(Co-Principal Executive Officer).



Dated: May 15, 2014	By: /s/ Fung Chi Kwong
	Name: Fung Chi Kwong

	Title: Chief Financial Officer

	(Principal Financial Officer)

RELATED PARTIES (Narrative) (Details) (Jonway Group [Member], USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Jonway Group [Member]
Related Party Transaction [Line Items]
Transaction amount	$ 217,000	$ 316,000

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Line of Credit) (Details) (USD $)	3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 CITIC [Member]	Dec. 31, 2013 CITIC [Member]	Mar. 31, 2014 Taizhou Bank [Member]	Dec. 31, 2012 Taizhou Bank [Member]	Mar. 31, 2014 Everbright Bank [Member]	Mar. 31, 2014 ICBC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity				$ 24,300,000		$ 4,100,000	$ 9,100,000	$ 5,400,000
Credit exposure			7,300,000	6,300,000	2,100,000		4,500,000	4,900,000
Amount outstanding	14,100,000		7,300,000	6,300,000	1,100,000		7,900,000	5,700,000
Interest rate			7.08%		8.89%
Interest rate, minimum	5.60%							5.60%
Interest rate, maximum	8.89%							7.20%
Available borrowing capacity								500,000
Collateral amount							2,100,000
Restricted cash deposit					1,000,000		3,400,000	800,000
Required cash deposit			100.00%				50.00%
Notes payable	$ 12,494,000	$ 15,695,000	$ 2,700,000		$ 2,000,000		$ 1,200,000
Expiration			Nov. 30, 2015				Dec. 31, 2014	Dec. 31, 2014
Beginning maturity date			Apr. 24, 2014		May 31, 2014
Ending maturity date			Apr. 29, 2014		Aug. 31, 2014

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, 2014
ORGANIZATION AND BASIS OF PRESENTATION [Abstract]
Percentage ownership in Jonway			51.00%
Acquisition purchase price	$ 31,750,000
Cash for acquisition	29,000,000
Shares issued for acquisition	8	8
Value of shares issued for acquisition	2,700,000
Per electric vehicle incentive	$ 9,510	60,000

SHAREHOLDERS' EQUITY (Details) (USD $)	3 Months Ended
SHAREHOLDERS' EQUITY (Details) (USD $)	Mar. 31, 2014
Share-based Goods and Nonemployee Services Transaction [Line Items]
Value of shares purchased by investors	$ 1,500,000
Strike price	$ 0.06
Subsequent Event [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Value of shares purchased by investors	1,900,000
Minimum [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Investment	1,500,000
Shares issued or issuable	25,000,000
Maximum [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Investment	$ 2,000,000
Shares issued or issuable	33,333,333

SEGMENT REPORTING (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Concentration Risk [Line Items]
Revenues	$ 6,821	$ 14,365
Cost of goods sold	7,792	13,615
Geographic Concentration Risk [Member] \| Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage	99.00%	99.00%
Revenues	6,700	14,200
Geographic Concentration Risk [Member] \| Cost of Goods Sold [Member]
Concentration Risk [Line Items]
Concentration risk percentage	99.00%	99.00%
Revenues	$ 7,700	$ 13,600
Customer Concentration Risk [Member] \| Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage	14.00%	11.00%
Supplier Concentration Risk [Member] \| Cost of Goods Sold [Member]
Concentration Risk [Line Items]
Concentration risk percentage	21.00%	21.00%

LITIGATION (Details) (USD $)	3 Months Ended
LITIGATION (Details) (USD $)	Mar. 31, 2014
LITIGATION [Abstract]
Average market price of 2008 Xebra	$ 3,100
Number of vehicles subject to remedy	691
Number of vehicles shipped	627
Civil penalties amount per vehicle	$ 3,100
Number of refund requests	318
Number of refunds granted	311

INVENTORIES, NET (Schedule of Inventory Reserve) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
INVENTORIES, NET [Abstract]
Beginning balance	$ 1,981	$ 2,325
Current provision for Jonway Auto		(529)
Current provision for inventory ZAP-net	(104)	185
Ending balance	$ 1,877	$ 1,981

INVENTORIES, NET (Schedule of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
INVENTORIES, NET [Abstract]
Work in Process	$ 2,474	$ 2,228
Parts and supplies	3,618	2,906
Finished goods	3,713	4,881
Inventories	9,805	10,015
Less - inventory reserve	(1,877)	(1,981)	(2,325)
Inventories, net	$ 7,928	$ 8,034

COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
COMMITMENTS AND CONTINGENCIES [Abstract]
Potential payments under guarantee	$ 7.0	$ 7.7

INVESTMENT IN JOINT VENTURES (Narrative) (Details)	3 Months Ended		12 Months Ended	3 Months Ended		12 Months Ended		3 Months Ended		12 Months Ended
INVESTMENT IN JOINT VENTURES (Narrative) (Details)	Mar. 31, 2014 USD ($)	Mar. 31, 2013 USD ($)	Dec. 31, 2013 USD ($)	Mar. 31, 2014 ZAP Hangzhou [Member] USD ($)	Mar. 31, 2013 ZAP Hangzhou [Member] USD ($)	Dec. 31, 2013 ZAP Hangzhou [Member] USD ($)	Mar. 31, 2014 ZAP Hangzhou [Member] Jonway Auto [Member]	Mar. 31, 2014 Shanghai Zapple [Member] USD ($)	Mar. 31, 2013 Shanghai Zapple [Member] USD ($)	Dec. 31, 2013 Shanghai Zapple [Member] USD ($)	Mar. 31, 2014 Shanghai Zapple [Member] ZAP Hangzhou [Member] CNY	Mar. 31, 2014 Shanghai Zapple [Member] Jonway Auto [Member] CNY
Schedule of Equity Method Investments [Line Items]
Ownership percentage				37.50%			25.00%				50.00%	50.00%
Original registered capital of joint venture				$ 3,000,000							3,000,000	5,000,000
Joint venture, capital investment				1,100,000
Equity method investment losses		$ 485,000	$ 899,000		$ 24,000	$ 438,000			$ 461,000	$ 461,000

INVESTMENT IN JOINT VENTURES (Summary of Financial Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Subsidiary or Equity Method Investee [Line Items]
Assets	$ 97,324	$ 107,033
Liabilities	91,568	97,682
Shanghai Zapple [Member]
Subsidiary or Equity Method Investee [Line Items]
Assets
Liabilities
Revenues
ZAP Hangzhou [Member]
Subsidiary or Equity Method Investee [Line Items]
Assets	1,217	1,346
Liabilities	340	359
Revenues		$ 83

RELATED PARTIES (Schedule of Related Party Balances) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Amount due from related party	$ 3,163	$ 6,061
Amount due to related party	4,786	2,409
Sanmen Branch [Member]
Related Party Transaction [Line Items]
Amount due from related party	2,130	4,973
JAZ [Member]
Related Party Transaction [Line Items]
Amount due from related party	1,033	961
Jonway Group [Member]
Related Party Transaction [Line Items]
Amount due to related party	2,351	303
Jonway Motor Cycle [Member]
Related Party Transaction [Line Items]
Amount due to related party	126	113
Taizhou Huadu [Member]
Related Party Transaction [Line Items]
Amount due to related party	736	631
Shanghai Zapple [Member]
Related Party Transaction [Line Items]
Amount due to related party	37	36
ZAP Hangzhou [Member]
Related Party Transaction [Line Items]
Amount due from related party		127
Ms. Lu [Member]
Related Party Transaction [Line Items]
Amount due to related party	30	30
Better World [Member]
Related Party Transaction [Line Items]
Amount due to related party	149	149
Cathaya Capital [Member]
Related Party Transaction [Line Items]
Amount due to related party	$ 1,357	$ 1,147

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 1,918	$ 2,629
Restricted Cash	7,790	10,758
Notes receivable		185
Accounts receivable	5,026	5,351
Inventories, net	7,928	8,034
Prepaid expenses and other current assets	471	1,007
Total current assets	23,133	27,964
Property, plant and equipment, net	46,627	48,004
Land use rights, net	9,864	10,008
Other assets:
Distribution agreements for Jonway Products and Better Worlds Products, net	9,479	9,839
Intangible assets, net	4,137	4,280
Goodwill	331	334
Due from related party	3,163	6,061
Deposits and other assets	590	543
Total other assets	17,700	21,057
Total assets	97,324	107,033
Current liabilities:
Short term loans	14,116	14,961
Convertible Bond	1,244	1,153
Senior convertible debt	20,679	20,679
Accounts payable	20,828	23,648
Accrued liabilities	7,609	7,874
Notes payable	12,494	15,695
Advances from customers	4,645	5,233
Taxes payable	791	1,704
Due to related party	4,786	2,409
Other payables	3,458	3,574
Total current liabilities	90,650	96,930
Long term liabilities:
Accrued liabilities and others	918	752
Total liabilities	91,568	97,682
Commitments and contingencies
ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized; 302,518,002 and 302,518,002 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively	232,659	231,125
Accumulated other comprehensive income	1,647	1,707
Accumulated deficit	(235,794)	(232,417)
Total ZAP shareholders' equity	(1,488)	415
Non-controlling interest	7,244	8,936
Total equity	5,756	9,351
Total liabilities and equity	$ 97,324	$ 107,033

SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended		1 Months Ended	0 Months Ended	1 Months Ended						0 Months Ended	1 Months Ended		0 Months Ended	1 Months Ended	0 Months Ended
SUBSEQUENT EVENTS (Details) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Apr. 30, 2014 Subsequent Event [Member]	May 15, 2014 Subsequent Event [Member] Ms. Lu [Member]	Apr. 30, 2014 Subsequent Event [Member] Ms. Lu [Member]	Apr. 30, 2014 Subsequent Event [Member] Cathaya Operations Management Limited [Member]	Apr. 30, 2014 Subsequent Event [Member] Chief Executive Officer [Member]	Apr. 30, 2014 Subsequent Event [Member] Company One [Member]	Apr. 30, 2014 Subsequent Event [Member] Company Two [Member]	Apr. 30, 2014 Subsequent Event [Member] Company Three [Member]	May 15, 2014 Subsequent Event [Member] Taizhou Bank [Member]	Apr. 30, 2014 Subsequent Event [Member] ICBC [Member]	May 15, 2014 Subsequent Event [Member] ICBC [Member]	May 15, 2014 Subsequent Event [Member] CITIC [Member]	Apr. 30, 2014 Convertible Debt [Member]	May 15, 2014 Litigation Settlement [Member]
Subsequent Event [Line Items]
Repayment of short term loans	$ 2,837,000	$ 817,000									$ 810,000			$ 560,000
Proceeds from short term loans	2,109,000	5,558,000									560,000	810,000
Maturity date											Nov. 30, 2014	Apr. 30, 2015
Interest rate												5.60%	8.89%
Notes payable maturities													4,070,000
Proceeds from notes payable	6,643,000	13,316,000	7,390,000
Conversion of debt				300,000	30,231	937,312									639,068
Shares of stock issued for the conversion of debt			17,819,783	4,862,237											6,439,552
Trading days				120 days
Shares of stock issued							61,000,000	20,000,000	20,000,000	21,000,000						62,500
Value of shares issued																$ 5,000

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Bank Acceptance Notes) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Bank acceptance notes payable	$ 12,494,000	$ 15,695,000
Everbright Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	7,870,000	8,891,000
Beginning maturity date	May 31, 2014
Ending maturity date	Sep. 30, 2014
Collateral amount	2,100,000
Required cash deposit	50.00%
Taizhou Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	1,947,000	3,927,000
Beginning maturity date	Apr. 30, 2014
Ending maturity date	Aug. 31, 2014
Required cash deposit	50.00%
CITIC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	2,677,000	2,700,000
Collateral amount	6,200,000
Required cash deposit	100.00%
ICBC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable		177,000
Collateral amount	$ 3,650,000
Required cash deposit	100.00%

CONVERTIBLE BOND (Details) (USD $)	3 Months Ended			12 Months Ended
CONVERTIBLE BOND (Details) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Convertible Bond [Member]	Dec. 31, 2013 Convertible Bond [Member]
Short-term Debt [Line Items]
Face amount			$ 1,700,000	$ 2,000,000
Percentage of stock price			30.00%
Interest rate			12.00%
Proceeds from convertible bond				1,700,000
Amortization of debt discount	91,000	391,000	180,000
Equity component			550,000	1,500,000
Remaining receivable			300,000
Conversion of debt			$ 300,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Common stock, shares authorized	800,000,000	800,000,000
Common stock, par value
Common stock, shares issued	302,518,002	302,518,002
Common stock, shares outstanding	302,518,002	302,518,002

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2014
SUBSEQUENT EVENTS [Abstract]
SUBSEQUENT EVENTS	NOTE 12 - SUBSEQUENT EVENTS In May 2014, Jonway repaid $0.81 million of a short term loan to Taizhou Bank when they became due. In April 2014, Jonway partially repaid $0.56 million of a short term loan to CITIC Bank. In May 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan expires in November 2014 and the annual interest rate is 8.89%. In April 2014, Jonway borrowed $0.81 million of short term loan from Industrial and Commercial Bank of China (ICBC). The loan expires in April 2015 and the annual interest rate is 5.6%. Restricted cash of the same amount was deposited with the bank. From April 2014 to May 2014, approximately $4.07 million of notes payable matured. In April 2014, approximately $7.39 million of notes payable were issued. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with the bank. These notes payable expire in October 2014. On April 29, 2014, the Company, Cathaya Capital L.P and Korea Yung ("Yung") entered into an agreement ("Agreement") to amend the terms of Yung's Convertible Bond. The Agreement provides that in the event the Company is unable to make the required Bond payment to Yung on or before June 20, 2014, the Company will be required to provide Yung with written notice setting forth the Company's proposal to extend the June 20, 2014 maturity date which proposal to subject to approval by Yung in her absolute discretion. The Agreement also provides that in the event either the Company or Zhejiang Jonway Automobile Co. Ltd. ("Jonway") is a party to a change of control transaction or a sale of assets, the proceeds from such transactions, subject to applicable law, shall first be applied by the Company toward the Bond payments to Yung prior to payments to any other creditors of either the Company or Jonway. Lastly, the Agreement provides that in the event of the liquidation and dissolution of the Company, the Bond payments to Yung, in compliance with applicable law, shall have priority over payments to other of the Company's unsecured creditors and that Cathaya Capital L.P. will subordinate to the Bond payments to Yung all preferences to which Cathaya Capital L.P. would be entitled upon such liquidation and dissolution. Cathaya Operations Management Limited, China Electric Vehicle Corp and Ms. Lu have elected to convert the amounts recorded as due to related parties to common stock. The amount of $937,312 due to Cathaya Operations Management Limited and the amount of $30,231 due to Ms. Lu have been converted into 17,819,783 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 17,819,783 shares of common stock have been issued in April 2014. Ms. Lu has elected to have her investment in the Convertible bond of $300,000 converted to 4,862,237 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 4,862,237 shares of common stock have been issued in May 2014. . China Electric Vehicle Corporation (CEVC) has elected to convert the interest of $639,068 due on the $20.7 million convertible note to 6,439,552 shares of common stock at the average of the closing prices for each trading day during such fiscal quarter ended on (and including) the last trading day of such fiscal quarter. The 6,439,552 shares of common stock have been issued in April 2014. . In March 2014, Jonway Group agreed to pay all of the outstanding mold expenses of the Minivan that is currently still outstanding, and in return ZAP will share half of the asset value and share the IPR (50%) of the Minivan with Jonway Auto. The Minivan was purchased by ZAP from a prior agreement between ZAP and Jonway Group which was signed on January 18, 2012. In return for ZAP receiving worldwide exclusivity for the sales, distribution, and product IPR rights for all current and future models of the compressed natural gas ("CNG") versions of Jonway Auto's Products, including, but not limited to, SUV, minivan, and all other models, the Company's Board of Directors authorized on March 28, 2014 to issue 61,000,000 shares of common stock to the companies owned by the Co-CEO and shareholder Alex Wang, including 20,000,000 shares to Major Management Limited, 20,000,000 shares to Max Reliance Management Limited and 21,000,000 shares to New Dragon Management Limited. The 61,000,000 shares of common stock have been issued in April 2014. In May 2014, ZAP issued 62,500 shares of common stock to Jeffery and Karen Bank, who paid $5,000 in cash on behalf of ZAP to address a lawsuit from Jackson Long.

Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2014	May 12, 2014
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014
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		392,702,074

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [Abstract]
Net sales	$ 6,821	$ 14,365
Cost of goods sold	(7,792)	(13,615)
Gross profit	(971)	750
Operating expenses:
Sales and marketing	734	1,433
General and administrative	2,064	1,976
Research and development	186	150
Total operating expenses	2,984	3,559
Loss from operations	(3,955)	(2,809)
Other income (expense):
Interest expense, net	(876)	(822)
Loss from equity investment in joint venture		(485)
Other Income	124	188
Total other income (expense)	(752)	(1,119)
Loss before income taxes	(4,707)	(3,928)
Income tax benefit (expense)	(304)	13
Net loss	(5,011)	(3,915)
Less: net loss attributable to non controlling interest	1,634	1,155
Net loss attributable to ZAP's common shareholders	(3,377)	(2,760)
Other Comprehensive income (loss)
Foreign currency translation adjustments	(118)	206
Other comprehensive income(loss)	(118)	206
Total comprehensive income (loss)	(5,129)	(3,709)
Less: comprehensive income attributable to non-controlling interest	1,692	1,054
Comprehensive loss attributable to ZAP's common shareholders	$ (3,437)	$ (2,655)
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	302,518

LITIGATION	3 Months Ended
LITIGATION	Mar. 31, 2014
LITIGATION [Abstract]
LITIGATION	NOTE 10- LITIGATION On March 13, 2014, the Company filed its own operative First Amended Cross-Complaint in the Cathaya Lawsuit (the "ZAP Cross-Complaint") against Abdou and Schneider, alleging causes of action for (1) breach of fiduciary duty; (2) conversion; (3) imposition of a constructive trust; and (4) an accounting. By the ZAP Cross-Complaint, the Company is, among other things, pursuing Schneider and Abdou for return of inventory and assets that were removed from the Company's warehouse, as well as cash that was redirected to another account. The Court set January 15, 2015 as the trial date for all parties' claims asserted in the Cathaya Lawsuit. 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 had 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 and the United States reached a settlement that is incorporated into a Consent Decree that was entered and approved by the U.S. District Court on July 17, 2013. Pursuant to the Consent Decree, ZAP agreed to initiate a buy-back program whereby it will offer to provide a refund of $3,100 to each eligible MY 2008 ZAP Xebra owner. The Consent Decree also contains notification and reporting requirements and requires ZAP to take specified actions regarding the disposition of repurchased vehicles and MY 2008 Xebras that remain in ZAP's possession. In accordance with the Consent Decree, the Company mailed the required notification letters to registered vehicle owners and ZAP Xebra dealers, along with a Refund Request Form. The repurchase offer extends to 691 vehicles that have been sold by ZAP. As of March 25, 2014 ZAP had received 318 refund requests of which 311 were deemed eligible Per the terms of the Consent Decree, ZAP was to repurchase the vehicles of all eligible owners who requested a refund by no later than December 31, 2013 or 30 days after an eligible owner's refund request, whichever is later. The Company did not repurchase any owner vehicles by December 31, 2013. ZAP began repurchasing vehicles in March, 2014. On April 7, 2014, ZAP and the United States who entered into an agreement to amend the Consent Decree wherein ZAP agreed to repurchase the vehicles of all eligible owners by no later than April 30, 2014. On April 30, 2014, ZAP reported to NHTSA that the Company increased the number of vehicle owners it deemed eligible for a refund from 311 to 315 and that ZAP had either delivered or mailed full refund checks to 314 vehicle owners. The remaining vehicle owner requested the check be hand delivered on May 2, 2014 and received payment on that day. Per the terms of the Consent Decree, ZAP has 30 days after it issues a refund to arrange for the pick up of a vehicle. As of May 12, 2014 the Company has picked up 263 vehicles and it plans on picking up remaining vehicles within the 30 day time frame. As of May 10, 2014 all payments have been remitted. The Company has accrued for estimated expenses related to the above claims.

SHAREHOLDERS' EQUITY	3 Months Ended
SHAREHOLDERS' EQUITY	Mar. 31, 2014
SHAREHOLDERS' EQUITY [Abstract]
SHAREHOLDERS' EQUITY	NOTE9- SHAREHOLDERS' EQUITY In February 2014, a binding letter of commitment in equity investment in ZAP was signed between ZAP and some investors in China. Based on the agreement, the investors agreed to invest $1,500,000-$2,000,000 to ZAP to pay for the buyback of the 2008 Xebras as mandated by the Department of Transportation. Also based on the agreement, upon receiving the investment, ZAP's common shares will be issued. The strike price of the shares issued will be at $0.06 per share which is discounted from the average price of the last 60 days at the time the agreement was signed, which is approximately $0.09 per share, resulting in the issuance of 25 million shares for $1,500,000 and 33,333,333 shares if $2,000,000 was reached. As of March 31, 2014, ZAP has already received the cash investment of $1,500,000 and recorded in "common stock" on the condensed consolidated balance sheet. As of the report date, common shares have not been issued yet. The Company expects to issue these shares in the 2nd quarter of 2014. As of the report date, US$1.9 million of the $2 million has been received.

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2014
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 11 - 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 $7.0 million and $7.7 million as of March 31, 2014 and 2013, respectively. The guarantee expires at variance dates from April 2014 through December 2014. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

RELATED PARTIES (Schedule of Contract Fees) (Details) (Sanmen Branch [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
First 3,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 44
First 3,000 Vehicles [Member] \| Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled
First 3,000 Vehicles [Member] \| Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,000
Vehicles 3,001 to 5,000 [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	30
Vehicles 3,001 to 5,000 [Member] \| Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,001
Vehicles 3,001 to 5,000 [Member] \| Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Over 5,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 22
Over 5,000 Vehicles [Member] \| Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Over 5,000 Vehicles [Member] \| Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (5,011)	$ (3,915)
Adjustments to reconcile net loss to cash (used in) operating activities:
Stock-based employee compensation	34	85
Depreciation and amortization	2,079	1,965
Provision for (recovery of) doubtful accounts	2	(6)
Inventory reserve	(32)	(74)
Loss from joint venture and other investments		485
Deferred tax expense (benefit)	304	(13)
Amortization of debt discount	91	391
Changes in assets and liabilities:
Accounts receivable	282	(617)
Notes receivable	185	919
Inventories	73	1,673
Prepaid expenses and other assets	177	(1,582)
Due from related parties	2,887	(518)
Accounts payable	(2,666)	(764)
Accrued liabilities	(52)	(385)
Taxes Payable	(901)	320
Advances from customers	(550)	(1,758)
Due to related parties	2,451
Other payables	(154)	(912)
Net cash used in operating activities	(801)	(4,706)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(480)	(335)
Net cash flows used in investing activities	(480)	(335)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash	2,910	(4,197)
Proceeds from notes payable	6,643	13,316
Proceeds from short term loans	2,109	5,558
Proceeds from equity investment	1,500
Repayments of notes payable	(9,748)	(9,167)
Payments on short term loans	(2,837)	(817)
Net cash provided by financing activities	577	4,693
Effect of exchange rate changes on cash and cash equivalents	(7)	(103)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(711)	(451)
CASH AND CASH EQUIVALENTS, beginning of period	2,629	1,656
CASH AND CASH EQUIVALENTS, end of period	1,918	1,205
Supplemental disclosure of cash flow information:
Cash paid during period for interest	314	197
Cash paid during period for taxes

CONVERTIBLE BOND	3 Months Ended
CONVERTIBLE BOND	Mar. 31, 2014
CONVERTIBLE BOND [Abstract]
CONVERTIBLE BOND	NOTE 6- CONVERTIBLE BOND On June 12, 2013, the Company signed a convertible bond agreement, pursuant to which a Convertible Bond would be put in place to fund the formation of JAZ (Jonway and ZAP) from the ZAP Hangzhou Joint Venture that was formed in 2010 in China, Hangzhou. The Convertible Bond was to be funded at US$2 million with the option to convert to JAZ shares upon listing on the AIM market at a discount of 30% of the IPO price, and if no AIM listing will be achieved within the duration of Bond period then the Convertible Bond can be converted into ZAP shares at 30% below market price based on the average trading prices of the previous 120 days after notification by bond holder for shares conversion in whole or in part of the bond sum. The Convertible Bond bears interest at 12% per annum payable in arrears in full. As of March 31, 2014, the Company received $1.7 million ($1.50 million net of interest) of $2 million, leaving $300,000 yet to be received. A total of $0.18 million in amortization was recorded with the remaining balance of $0.55 million of the discount was offset against the Company's equity account. The Bond has not been fully funded and the remaining $300,000 may not be forthcoming and its settlement date is uncertain. Therefore, the final amount of the Bond will not be determined until either the $300,000 is received or the principal amount of the Bond is reduced to $1.7 million. As of March 31, 2014, only the $1.7 million that has been funded is accounted for in the accompanying consolidated financial statements. Ratification by the Company's board of directors of the final amount of the Bond is pending the definitive payment or nonpayment of the remaining$300,000. On March 30, 2014 and April 22, 2014 a bondholder requested an early conversion of $300,000 of the principle balance of the Bond into shares of the Company's common stock. The Company permitted the bondholder to exercise his conversion rights subject to the terms and conditions of an agreement dated April 23, 2014 which, among other things, calculated conversion prices for the Company's common stock based upon the conversion terms set forth in the Bond. Till our report date, the common stock hasn't been issued yet and will be issued in the 2nd quarter of 2014.

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES [Abstract]
Currency exchange rate	6.1632	6.1122
Average currency exchange rate	6.0969	6.1171