People walk past the open store of a giant electric car in Wuhan, Hubei province, China, on the last day of the National Day and Golden Week holidays on October 7, 2021. Evergrande, China’s largest real estate developer, is facing a liquidity crisis with total debt of nearly $300 billion. The problems the company is facing could affect the Chinese economy and the global economy as a whole.
GUANGZHOU, China – The electric car unit of embarassed Chinese real estate developer Evergrande said the first car will be taken off the production line next year.
The debtor company has promised to begin mass production of Tsunekichi brand vehicles by meeting with suppliers and local governments in Tianjin, where its production base is located.
Share price of China Evergrande New Energy Vehicle Group rose more than 10% in morning trading, but moderated some of that increase. It was about 6% higher during the lunch break in Hong Kong.
Evergrande hasn’t made a single vehicle available to its customers yet, but it has high ambitions. Earlier, it had promised to produce and sell one million units annually by 2025.
The local government in Tianjin said it would support Evergrande and coordinate with financial institutions to help the company achieve mass production.
Parent company Evergrande Group is struggling to pay off its $300 billion debt. It is one of the most indebted real estate developers in the world and has already missed some bond payments. There are concerns that the company may have disrupted global markets by default, as some investors are concerned it could have a contagion effect and damage the global economy.
Trust in Evergrande has waned.
Last month, Evergrande NEV said that some projects across the group had been suspended due to delays in the supplier of electric vehicle units. Evergrande said it is looking for new investors.
A Chinese company said it tested various models of Hengqi cars throughout the year.
However, automakers are entering the highly competitive electric vehicle market in China and will face upcoming companies such as Nio and Xpeng and established players such as BYD and Tesla.
US-listed startup Xping said on Monday that it had produced 100,000 cars six years after its launch.
SourceLink Evergrande New Energy Vehicles says it will launch an electric vehicle in 2022