Evergrande New Energy Auto (Evergrande Auto)
Overview
Company Type: Subsidiary
Industry: Automotive
Founded: August 28, 2019
Founder: Xu Jiayin
Headquarters: China, Sweden
Website: Evergrande Group
Evergrande New Energy Auto (Chinese: 恒大新能源汽車) was a Chinese automobile manufacturer owned by the Evergrande Group that specialized in developing electric vehicles (EVs). The company aimed to compete in the rapidly growing EV market but faced severe financial troubles, leading to its downfall.
History
Foundation and Early Development (2019-2021)
Evergrande New Energy Auto was officially founded on August 28, 2019, as part of Evergrande Group’s ambitious expansion into the electric vehicle industry. With manufacturing operations in both China and Sweden, the company sought to establish itself as a major player in the global EV sector.
Evergrande’s primary automobile brand was Hengchi (Chinese: 恒驰), under which it planned to launch a range of electric vehicles. The company acquired assets from the bankrupt Swedish automaker Saab in 2012 and established National Electric Vehicle Sweden (NEVS) to leverage Saab’s automotive expertise.
Expansion and Strategic Partnerships
Evergrande aimed to strengthen its EV development by acquiring key assets and forming strategic partnerships:
- NEVS Acquisition: Evergrande took control of NEVS, inheriting Saab’s intellectual property and manufacturing base in Sweden.
- Koenigsegg Collaboration: In 2019, Evergrande briefly partnered with Swedish supercar maker Koenigsegg, acquiring a 20% minority stake in the company.
- Auto City in Nansha, Guangzhou: The company announced plans to build Evergrande Auto City, a large-scale production and research hub dedicated to new energy vehicles.
By 2021, Evergrande had aggressively invested in EV development, with multiple Hengchi-branded concept vehicles showcased as prototypes.
Financial Collapse and Debt Crisis (2022-2024)
Despite its aggressive expansion, Evergrande Auto faced severe financial difficulties as its parent company, Evergrande Group, struggled with mounting debt. Several warning signs indicated the company’s impending failure:
- Liquidity Issues: Evergrande Auto failed to secure adequate funding for mass production.
- Debt Default: The company fell into financial distress as Evergrande Group defaulted on its debts.
- Suspended Operations: Production plans were halted, and employee salaries were cut as the company scrambled for liquidity.
On February 2, 2024, Evergrande Auto issued an official statement regarding ongoing negotiations with investors and creditors to restructure its debt. However, no final resolution was reached, further delaying its ability to recover.
On May 22, 2024, Evergrande New Energy Auto received a formal request from local administrative authorities to terminate its agreements and return RMB 1.9 billion in rewards and subsidies previously granted to the company. This marked the final blow to Evergrande Auto, signaling the end of its ambitions in the electric vehicle sector.
Legacy and Impact
Evergrande New Energy Auto’s failure highlights the risks associated with overexpansion and financial mismanagement. The company, despite its ambitious plans and high-profile acquisitions, was unable to transition from concept models to mass production. The downfall of Evergrande Auto serves as a cautionary tale for other Chinese EV startups that rely heavily on speculative investment and government subsidies without securing a sustainable financial foundation.
See Also
- Hengchi – Evergrande’s EV brand
- NEVS – Former Saab assets acquired by Evergrande
- Koenigsegg – Brief partnership with Evergrande
- Evergrande Group – Parent company facing financial turmoil
References
- Evergrande Group Official Website: https://www.evergrande.com/
- Reuters: “Evergrande’s EV Ambitions Face Uncertain Future” (2024)
- Bloomberg: “China’s Evergrande Auto: The Rise and Fall of a Giant” (2024)
- Financial Times: “Why Evergrande’s Auto Dream Collapsed” (2024)
- South China Morning Post: “Evergrande’s Debt Crisis and its Impact on the Auto Industry” (2024)
