HONG KONG (Reuters), March 23rd, 2019 – China Evergrande New Energy Vehicle Group Ltd (0708.HK), said Thursday that it may have to stop production of electric vehicles (EVs). This comes after delivering more then 900 units of its flagship Hengchi 5 model.
China Evergrande Group (3333.HK), an embattled developer, said its EV manufacturing unit was looking to reduce costs by reducing staff numbers and improving management efficiency.
It stated that the Group was at risk of ceasing production due to inability to obtain additional liquidity.
The company stated that it would launch several flagship models and hope to achieve mass production if it could get financing of more than 29 million yuan ($4.2B) in the future.
According to this plan, the cumulative unleveraged cashflow from 2023 to 2026 was estimated to be negative 7 billion to negative 5 billion yuan.
This news comes after China Evergrande Group, its parent, announced plans to restructure its $22.7 billion offshore debt. This could be a model for distressed competitors in the country’s property industry. Continue reading
The unit had previously stated that it would begin mass production of its second EV model during the first half 2023 and a third during the latter half.
It also stated that it intended to produce 1 million vehicles per year by 2025.
The unit announced in December that it would be laying off employees and cutting salaries as part of its cost-reduction efforts.
The EV unit is crucial for Evergrande’s transformation plans. It was once China’s top-selling real estate developer, but now it is at the heart of a deepening credit crisis.
Since April 2022, shares in the unit have been frozen.
($1=6.8802 Chinese Yuan)
Reporting by Anne Marie Roantree and Donny Kwok; Editing by Stephen Coates
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