China Evergrande’s EV unit may halt production

Aims to cut costs by reducing staff numbers and improving management efficiency

HONG KONG:

China Evergrande New Energy Vehicle Group Ltd said on Thursday it may have to halt production of electric vehicles (EVs) if it could not obtain fresh funding, after delivering more than 900 units of its flagship Hengchi 5 model.

The EV manufacturing unit of the embattled developer China Evergrande Group said it was aiming to cut costs through measures such as reducing staff numbers and improving management efficiency.

“In the face of inability to obtain additional liquidity, the group is at risk of discontinuing production,” it said.

If, however, it could obtain financing of more than 29 billion yuan ($4.2 billion) “in the future”, it aimed to launch a number of flagship models and hoped to achieve mass production, the company said in a statement.

Under that plan, the cumulative unleveraged cash flow from 2023 to 2026 was expected to reach negative 7 billion yuan to a negative 5 billion yuan.

The news comes after its parent, China Evergrande Group, on Wednesday announced plans for the restructuring of its $22.7 billion in offshore debt, which could set a template for distressed rivals in the property sector.

Published in The Express Tribune, March 24^th, 2023.

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