Distressed China Evergrande New Energy Vehicle Group has been requested to return CNY1.9 billion (USD262.3 million) in grants and subsidies given to it by local government departments, the electric car arm of beleagured property developer China Evergrande Group said yesterday.
Should Evergrande NEV be required to refund the money, it will have a major adverse impact on the company finances, the Guangzhou-based firm said, adding that it is in negotiations with local government departments but did not name which ones they are.
Evergrande NEV is in dire straits. The firm had racked up losses of CNY110 billion (USD15.2 billion) as of the end of last year, CNY12 billion (USD1.7 billion) of which was squandered in 2023, according to its latest financial report. And it only had CNY130 million (USD17.9 million) left in its bank accounts.
A lack of funds forced the firm to halt production in April last year. As of Dec. 31, 2023, only 1,700 Hengchi 5 autos had rolled off the production line at its Tianjin factory, and it had only delivered 1,389 units.
And the future looks bleak. Evergrande NEV was offered a lifeline in August last year by United Arab Emirates green mobility solutions provider NWTN which agreed to invest HKD3.9 billion (USD500 million) in Evergrande NEV in return for a 27.5 percent stake. NWTN also would have provided CNY600 million in interest-free transitional funds.
But Evergrande NEV lost out on this deal as it was unable to meet the preconditions. The offer was dependent on parent firm China Evergrande completing its debt restructuring and other conditions. But China Evergrande was unable to do so within the required time period and in January was even slapped with a winding up petition from the Hong Kong High Court.
Evergrande NEV’s share price [HKG:0708] surged 70 percent on May 17 amid a general rebound in Hong Kong-listed developers' stocks. But the company halted trading on May 20, citing the pending release of inside information. However so far, no information has been disclosed and trading has not been resumed.
