The electric vehicle division of the heavily indebted Evergrande Group, Evergrande New Energy Vehicle, is sticking to its plans to produce electric cars despite the liquidity crisis at the parent company. The Hengchi 5 is to be ready for sale in early 2022. The company is receiving help from the local government.
According to Liu Yongzhuo, president of Evergrande New Energy Vehicle, the company has started a three-month campaign to get its problems under control, reports the South China Morning Post. According to the report, the vehicle is being built and tested at the Tianjin plant.
The necessary help has been pledged by the chairman of the Communist Party of Binhai High Technology Area in Tianjin, the report adds. Managers of the carmaker had met with partners and local officials in Binhai, a district of Tianjin, to discuss the situation, it said.
“The hi-tech district and the Evergrande New Energy Vehicle Group have their fates intertwined. We need to face the difficulties, seek opportunities, and provide help in financing policy, review and coordination among related departments and financial institutions to support the company to step out of this difficult situation as soon as possible and help Evergrande to achieve its goal of mass production early,” said Xia Qinglin, party chairman of the district.
As recently as August, speculation had arisen that the Chinese real estate group Evergrande might be on the verge of withdrawing from the automobile business. The company is said to have examined the sale of the division to other Chinese carmakers. There have also been talks. With the information now published, however, these plans seem to be off the table.
In recent years, the Evergrande Group has built up its own car business with numerous acquisitions. It first invested in Faraday Future through its health division Evergrande Health, but then pursued its own plans: the first six electric cars were announced a year ago through the Hengchi brand.
The Evergrande Group was able to finance its car plans from the flourishing real estate business in China. But now the real estate market in China has faltered, putting Evergrande in a difficult financial position.
This spring, Evergrande New Energy Vehicle surpassed even Ford and GM in stock market value. But the share price fell sharply over the past few weeks. Since its peak of 87 billion dollars at the end of April, Evergrande’s auto division had lost 92 percent of its value by the end of August. The decisive factor for the drastic slide in the share price was the announcement of a loss of around 740 million US dollars in the first half of 2021.
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