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Evergrande changes gear with launch of first electric car to shore up revenue

The electric vehicle unit of indebted Chinese property developer Evergrande has launched its first car and began taking orders, as its chair pivots to carmaking in an attempt to shore up revenues.

The order announcement from Evergrande New Energy Vehicle Group came in the same week the developer delayed one of its offshore dollar bond payments again and opposed a Hong Kong winding-up petition filed by one of its small creditors.

Before Evergrande’s collapse last year, chair Hui Ka Yan said he wanted the embattled property developer to shift its focus from real estate to manufacturing electric vehicles. But Evergrande NEV has not delivered a single car, fuelling scepticism from industry insiders and analysts about Hui’s strategy.

The newly launched vehicle, Hengchi 5, is an electric sport utility vehicle priced at Rmb179,000 ($26,700), or about half of Tesla’s Model Y. It is the first vehicle the company has sold since it rebranded in August 2020. It was previously called Evergrande Health.

The price is also relatively cheaper than homegrown competitors because Hui wanted the company’s first EV model to be a “hit”, said one person at the company.

Yale Zhang, general manager of Automotive Foresight, a Shanghai-based research firm, said Evergrande could boost its sales through car and apartment bundles.

He added that it would be difficult for Evergrande to compete with rival Chinese EV makers. “They can choose to become another homegrown electric vehicle brand, following the [distribution] model of Xpeng or Nio, but that won’t be easy as it’s very capital consuming,” said Zhang.

The share price of Evergrande NEV rocketed last year after high-profile backers with close links to Hui, once China’s richest man, rallied behind the company.

The release of the Hengchi 5 follows a HK$500mn (US$64mn) share sale launched in November last year, less than a month before Evergrande group was formally declared in default after the expiry of grace periods for payments on two liabilities.

Evergrande group has more than $300bn of liabilities, about $20bn of which are offshore dollar-denominated bonds. The Chinese government has focused on completing work at its hundreds of projects, where homes have typically been sold to ordinary buyers before completion.

Evergrande is hoping to release a debt restructuring plan by the end of this month.

“By bringing together the knowledge of the world, and working with the best parts suppliers, we have created a great Chinese car and are striving to become a globally recognised national automobile brand,” Evergrande NEV’s president Liu Yongzhong said at an event announcing the car’s launch on Wednesday evening.

Liu said the first cars would finish production in October. The company in May pushed back the production date from June to September.


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