The Chinese electric vehicle firm that pledged in March 2019 to beat Elon Musk and be the world’s largest EV maker in five years now appears to be further away than ever.
On Monday evening, China Evergrande New Energy Vehicle Group Ltd., a Hong Kong-listed subsidiary of the faltering property juggernaut China Evergrande Group, stated that automobile manufacturing might have to be postponed unless extra cash can be secured shortly.
“Although mass manufacturing of Hengchi vehicles is nearing completion, the group continues to have cash flow challenges,” the business stated, referring to its automobile brand, which features a rumble gold lion on a badge and loosely translates to ‘unstoppable gallop.’ “If the group does not receive more funding contributions shortly, the mass-production schedule for new energy cars may have to be pushed back.”
Evergrande NEV also announced a loss of $742 million for the six months ended June 30, matching the parent company’s profit warning last week. The group’s health and aged-care company generated 6.92 billion yuan in revenue, with the health and aged-care company accounting for the vast bulk of that (6.89 billion yuan).
It’s been a long wait for Evergrande stockholders who believe in Chairman Hui Ka Yan’s vision. Tesla Inc. has established an enviable presence in China in the over two years after his first proclamation, while local rivals such as Nio Inc., Xpeng Inc., and Li Auto Inc. are meeting real, measurable production targets. Xpeng expects to break even in 2 – 3 years as it accelerates deliveries, while Li Auto produced a historic 17,575 units in the second quarter, up 166 percent from the previous quarter.
Hui’s declaration is at least the third time he’s issued a public warning about car manufacturing goals. During an earnings report in late March, this billionaire did, however, make a more optimistic prediction: 5 million cars every year by 2035. (By way of reference, Volkswagen AG, the world’s largest automaker, delivered 3.85 million vehicles in China in 2020.)
While the modest amount of income Evergrande NEV does generate from its vehicle segment climbed 54 percent, mostly on sales of auto components and availability of technical solutions, sales of lithium batteries fell 79 percent, according to this week’s financial announcement.
Investors knocked Evergrande NEV shares down as high as 5.8%, extending the month’s losses to 54 percent. Since its February high, the stock has dropped 92%, wiping off over $80 billion in the market worth from what used to be the property developer’s most valuable publicly traded asset.