Evergrande NEV’s US$75 billion loss in value dashes Hui Ka-yan’s hopes for a share of the world’s largest market for electric cars

China Evergrande Group’s aspiration for a foothold in the world’s largest and fastest-growing market for electric vehicles appears to be losing ground even before the first car rolls off its assembly lines, as the bubble around subsidiary deflated further.

Shares of China Evergrande New Energy Vehicle Group, 65 per cent owned by Evergrande, plunged by as much as 22 per cent to an intraday low of HK$5 before clawing back some of the losses to close 19 per cent down at HK$5.18 in Hong Kong. The stock has lost HK$587 billion (US$75.3 billion) in value - more than the capitalisation of General Motors - since its February peak, prompting even insiders like vice-chairman Xia Haijun to pare their stakes.

At 83 per cent loss on year-to-date basis, the stock plunge is almost twice as much as the worst performer in an index of 30 global EV and battery producers compiled by the Intercontinental Exchange and FactSet, according to Bloomberg data, and four times the slide in NIO, the largest among the trio of US-listed Chinese EV makers.

The slump reflects the jitters surrounding its parent Evergrande, the world’s most-indebted property developer. Unable to access bank financing under China’s tough “three red lines” leverage rules, billionaire founder Hui Ka-yan is taking steps to repair its balance sheet, assuage Chinese authorities and restore confidence among investors.

China, already the world’s largest market for all kinds of automobiles since 2009, also has the fastest-growing industry for so-called new energy vehicles (NEVs), where three of every five new cars to come on the nation’s roads are expected to be powered by electricity by 2030, according to a UBS forecast.