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BEIJING, March 24 (TMTPOST) —— China"s second largest property developer Evergrande"s automobile business segment has delivered more than 900 units of its first model, the Hengchi 5, but it still faces the risk of halting production if it cannot secure new funding, according to a notice released by Evergrande Automobile on Thursday.
If Evergrande gets 29 billion yuan ($4.2) in financing in the future and launches and mass-produces multiple models as planned, the cumulative unleveraged cash flow gap between 2023 and 2026 is expected to be between 5 billion yuan ($726 million) and 7 billion yuan ($1.02), according to the company.
Evergrande, which has been suspended from trading since April 1, 2022, has yet to release its 2021 financial results, 2022 semi-annual results, and 2022 full-year financial results. The financial data of the automobile and battery sector disclosed by Evergrande Automobile on Thursday showed that by the end of 2021, the company"s cash and equivalents were 1.287 billion yuan ($187 million), total assets were 59.52 billion yuan ($8.7 billion) and total liabilities were 58.83 billion yuan ($8.6 billion). This data was unaudited.
Evergrande"s parent company, China Evergrande, has long planned to invest in new-energy vehicles. Evergrande Auto invested in Jia Yueting"s Faraday Future (FF) in the United States through a Hong Kong company at the end of 2017. The two sides had an investment dispute and settled the dispute at the end of 2018. Evergrande Auto retained part of FF shares but did not continue to invest. Evergrande has not given up on the automotive business, acquiring 51 percent of National Electric Vehicle Sweden AB (NEVS) in January 2019, and has acquired the remaining stake in NEVS in two separate acquisitions since then.
Evergrande began to build its business system based on NEVS. NEVS, based in Sweden, bought Saab out of bankruptcy in 2012. NEVS established a subsidiary in Tianjin called Guoneng New Energy Automobile Co., LTD. (hereinafter referred to as "Guoneng Automobile") in 2015, which developed electric models based on the original Saab Automobile fuel vehicle product platform.
Guoneng Automobile has a new energy vehicle qualification and an established factory in Tianjin. Guoneng Automobile announced the establishment of a factory in Shanghai in June 2018. At the time of the acquisition by Evergrande Automobile, the Guoeng Shanghai plant had not yet been built, and the following construction was undertaken by Evergrande Automobile.
According to people familiar with the matter, Xu Jiayin, chairman of embattled Chinese real estate giant Evergrande Group, considered Guoneng"s product platform to be old and low-end. Soon after the acquisition, Evergrande decided to reinvent the wheel and develop new products. Evergrande Auto launched its new brand "Hengchi" and commissioned external development agencies to develop nearly ten models in August 2019. Evergrande Automobile announced that it had signed a contract with 15 top international designers to design the appearance of Hengchi models in October of that year. Evergrande held a global Strategic Partnership Summit in Guangzhou in November, inviting 60 auto suppliers from home and abroad.
When China Evergrande was flush with cash, it made a series of large acquisitions, claiming to build the world"s largest new-energy vehicle group. As soon as the company got the business off the ground, Xu set an ambitious target of annual sales of 1 million vehicles in 2025 and 5 million in 2035.
