China: the automotive branch of the Evergrande group in turmoil
China Evergrande New Energy Vehicle Group electric vehicle plant in Tianjin, China, October 20, 2021. © SUN YILEI/REUTERS
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1 min
While its parent company, the Chinese real estate group Evergrande, is fighting for its survival, its automotive branch is in turn in turmoil. The Evergrande New Energy Vehicle group announces that it is struggling to stay afloat due to a lack of necessary funding.
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In order to continue its business, Evergrande New Energy Vehicle would need the equivalent of more than $4 billion. If he does not get this money, the group may stop its production.
Rumors of financial difficulties and a possible acquisition of Evergrande's auto arm by another automaker have flourished lately. In December 2022, the group was forced to suspend series production of its only model, the Hengchi 5, officially due to a lack of orders.
$300 billion in debt
Founded in 2019, the electric vehicle division of the Chinese real estate group aimed to compete with the American manufacturer Tesla. The subsidiary thus gave itself "three to five years" to become the "most powerful" group in the world in the field of electric cars. But to date, only 900 vehicles have been sold - compared to nearly 75,000 in February alone for rival Tesla. And the generous public subsidies that the group had initially received ended at the beginning of the year.
Real estate conglomerate Evergrande, which owes some $300 billion to its creditors, offered them stakes in two of its many subsidiaries in exchange for its debt. Its fragile electric vehicle branch could well be affected by this offer.
► READ ALSO: China sets a growth target of 5% for the year 2023
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