Evergrande NEV’s stuttering car-production plan delivers blow to Hui Ka-yan’s vision of challenging Elon Musk’s Tesla

Mass production of Hengchi-branded cars is in the final stretch, but the group still faces cash flow challenges, says arm of China Evergrande Group

Evergrande NEV reports loss of 4.8 billion yuan (US$742 million) for the first half

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Officials gather for the launch ceremony of China Evergrande New Energy Vehicle Group’s production of electric cars in Tianjin, China, on June 29, 2019. Photo: Handout

Published: 2:40pm, 31 Aug 2021Updated: 11:55am, 15 Sep 2021

The Chinese electric-vehicle start-up that vowed in March 2019 to take on Elon Musk and become the world’s biggest maker of EVs within five years seems further away from that goal than ever.

China Evergrande New Energy Vehicle Group, the Hong Kong-listed arm of struggling property behemoth China Evergrande Group, said on Monday evening it might have to delay car production unless it can secure more capital in the short term.

“The mass production of Hengchi vehicles has entered the final stretch, nonetheless the group is still facing challenges on its cash flows,” the company said, with reference to its car brand, which sports a roaring gold lion on the badge and translates loosely to ‘unstoppable gallop’. “If the group lacks further capital contribution in the short term, the mass-production timetable of new energy vehicles may have to be delayed.”

Evergrande NEV also reported a 4.8 billion yuan (US$742 million) loss for the six months to June 30, confirming a profit warning from the parent company last week. Revenue came in at 6.92 billion yuan, with the vast majority of that – 6.89 billion yuan – from the group’s health and aged-care business.

Evergrande NEV unveiled three new models of electric cars in February. Photo: Weibo

For shareholders loyal to Evergrande chairman Hui Ka Yan’s vision, it’s been an awfully long wait. In the more than two years since his first proclamation, Tesla has gained an enviable foothold in China while local rivals like NIO, Xpeng and Li Auto are hitting real, tangible production targets. Xpeng is aiming to turn profitable within two-to-three years as it ramps up deliveries while Li Auto delivered a record 17,575 units in the quarter ended June, a 166 per cent increase from a year earlier.

Monday’s announcement marks at least the third time Hui has sounded a public warning on car-production targets. Speaking on an earnings call in late March, the billionaire did however issue a buoyant new forecast: 5 million cars a year by 2035. In comparison, global giant Volkswagen delivered 3.85 million units in China in 2020.