Investor in Evergrande’s Electric Car Unit to Pause Payments
The article explained Dubai-based NWTN Inc. will stop giving support to Evergrande New Energy Vehicle (NEV) Group. It also casted a doubt on how Evergrande will raise fund to pay creditors. Evergrande has proposed that creditors can choose to receive a combination of new debt and instruments tied to the shares of its property-services unit, its EV division or the builder itself.
One may wonder if the above has any negative impact to the Chinese EV industry especially those companies which are still making losses.
Dubai-based NWTN suspend support for Evergrande NEV
The electric vehicle unit of defaulted property developer China Evergrande Group said Dubai-based NWTN Inc. will suspend carrying out its obligations under their share subscription agreement. NWTN isn’t obligated to provide the second and third tranches of transitional support to China Evergrande New Energy Vehicle Group Limited, “given the current situation,” according to a filing to the Hong Kong Stock Exchange on Sunday.
Initial plan to raise $500 million
The car maker had said in July that it plans to raise about $500 million to satisfy capital requirements for production and sales of its Hengchi 5 EVs, its only available model. The company delayed payments and halted production when liquidity strains and liability issues mounted around its parent. In August, NWTN, a mobility technology company, said it would invest $500 million in Evergrande NEV in exchange for shares and a majority of seats on the electric vehicle maker’s board.
Evergrande NEV make net loss
At its peak valuation in April 2021, Evergrande NEV was worth more than Ford Motor Co. and General Motors Co., despite not yet having started sales. It began delivering electric sport utility vehicles late last year. Still, the company recorded a net loss of 84 billion yuan ($11.7 billion) for 2021 and 2022 combined, according to results released in July. The firm also warned of its ability to continue as a going concern.
At its peak valuation in April 2021, Evergrande NEV was worth more than Ford Motor Co. and General Motors Co., despite not yet having started sales. It began delivering electric sport utility vehicles late last year. Still, the company recorded a net loss of 84 billion yuan ($11.7 billion) for 2021 and 2022 combined, according to results released in July. The firm also warned of its ability to continue as a going concern.
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