A Shanghai subsidiary of Evergrande New Energy Vehicle Group (Evergrande Auto) recently released details about it having become a judgement debtor, as well as regarding consumption restriction orders.
According to public information, the company and its legal representative, Fang Chi, became a “dishonest judgement debtor,” with the offending act of “having the ability to perform but refusing to perform the obligations specified in the effective legal documents.” The enforcement courts are all People’s Courts in Shanghai’s Songjiang District.
In fact, in July this year, the company released two pieces of information about it being a judgement debtor when the total amount of debt of the company exceeded 13.08 million yuan ($1.8 million). As of September, Evergrande New Energy Automobile Investment Holdings Group Co., Ltd., the entity behind the aforementioned company, had been sued 57 times.
Evergrande Group is one of the top real estate developers in China. After a crisis broke out regarding its real estate business, it became saddled with over $300 billion in debt and began to regard its new energy vehicle business as an important opportunity. Hui Ka Yan, founder and chairman of the board of Evergrande Group, previously said that in the next 10 years, the group will transform into a new energy vehicle enterprise, while its real estate business will become an auxiliary division. The group has spent four years in the NEV industry, with investment of 47.4 billion yuan ($6.53 billion), having a deep layout in the industrial chain and investment.
However, Evergrande Auto gave the market high expectations in the early stages, then declined sharply. It seemed unable to support capital-intensive automobile manufacturing.
During Auto Shanghai in 2021, the company released nine new Hengchi vehicle models at once. However, apart from Hengchi 5, the other eight models were captured being removed from the show. In September this year, Hengchi 5, the first model of Hengchi Auto, officially started mass-production at the company’s Tianjin factory. At that time, the firm announced that the model would kick off delivery in October, but it still has yet to begin. Up to now, there is no precise news that the car is being delivered to consumers.
If the models are delivered smoothly, the company can gain a more steady cash flow. Liu Yongzhuo, the president of Hengchi Auto, also said that it aims to complete delivery of the 10,000th vehicle in the first quarter of 2023. At the same time, the company is also accelerating the mass production of more models.
These steps will help raise the valuation of Evergrande’s automobile business. Before Hui Ka Yan announced the transformation plan, Evergrande Group planned to sell its automobile business in exchange for funds. In August 2021, the group announced that it was contacting third-party investors to discuss the sale of some of its assets, including some interests in Evergrande Auto.