It looks like NEVS was the canary in the coal mine as the Evergrande New Energy Vehicle Group is teetering on the brink of disaster.
In a business update noticed by Bloomberg and Reuters, Evergrande discussed a complicated restructuring designed to shore up their finances. While the filing is massive, due to Evergrande being involved in multiple areas including real estate, it paints a dark picture for automotive production.
In particular, the filing says the Hengchi 5 went into production on September 16th, but they’ve only delivered a little over 900 units since then. More worryingly, the company said “Due to the tight liquidity situation and in order to maintain basic business operations, Evergrande NEV has taken initiatives to cut costs, such as reducing its workforce headcount.”
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As part of this effort, the automaker has slashed 931 jobs to bring their headcount down to 2,795 employees. Despite this and other cost cutting moves, the company said “In the absence of new funding, Evergrande NEV will face the risk of shutdown.”
However, Evergrande isn’t throwing in the towel. Instead, they want to obtain over ¥29 billion ($4.2 billion) in financing, so they can “launch a number of flagship models” and “achieve mass production.” Of course, that’s not exactly pocket change and there’s no guarantee the funds would turn the company into a success.
Evergrande had plans for an expansive automotive lineup and wanted to sell more than 1 million vehicles annually by 2025. That looks doubtful and so does their goal of selling 5 million vehicles annually by 2035.
