Chinese Tesla challenger Evergrande Health says profit will recover with new electric cars on the way, as losses triple in 2019
- The loss-making electric-car arm of developer China Evergrande, which also builds hospitals, says things will get better with the launch of new models soon
- ‘Without mass production and delivery, we see little income. But it is just temporary,’ says Pan Darong, the company’s chief financial officer
The electric-vehicle arm of Chinese developer Evergrande Group has vowed that business will get better this year after reporting a dramatic widening of losses for 2019.
Evergrande Health, so-called because it focused primarily on care homes and hospitals before branching out into electric cars, saw a net loss of 4.4 billion yuan (US$620 million) in 2019, almost three times that of the previous year, according to a filing to the Hong Kong stock exchange on Monday.
The company, which sees itself as Tesla’s main challenger in China, said it has 14 new models in the pipeline which it aims to move to mass-production and sales in the next couple of years.
“We are still at an early stage of input, including buying stakes in EV related companies, construction of our plants and R&D development. Without mass production and delivery, we see little income.” said Pan Darong, the company’s chief financial officer, in a post-results conference call..
“But it is just temporary. When the first series of our products starts to be mass-produced and put into the market in 2021, we will have income and the figures will turn better,” Pan said.
The company, which sees itself as Tesla’s main challenger in China, said it invested 20 billion yuan in developing next-generation cars last year and will to pour in another 15 billion yuan this year and 10 billion yuan in 2021.
Hengchi 1, the first car under the company’s own brand “Hengchi”, meaning run fast forever, will debut this year and go into mass production in 2021. Thirteen other models are also under development.
Hong Kong to phase out fossil fuel cars and go all electric over next 20 years
The company said two of its production bases, in Guangdong and Shanghai, will be completed in the second half of this year and will be able to produce 200,000 vehicles annually from next year.
“We are well backed by the Evergrande Group, which has enough capital to further invest and we believe we have picked the right track adventuring into the electric car business, which will later bring us fruitful return,” said Pan.
The parent company, a major Chinese home builder, China Evergrande, chaired by Chinese billionaire Hui Ka-yan, jumped into the electric car business in June 2018 and has pledged to challenge the likes of Tesla, and become the world’s biggest electric vehicle maker in three to five years.
However, the new business is not contributing any profit to the heavily-indebted home builder.
China Evergrande issued a profit warning on March 22, expecting its own net earnings to have plunged 50 per cent in 2019.
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