Chinese car manufacturer Evergrande NEV: My house, my car, my bankruptcy

Inhaltsverzeichnis

(Hier finden Sie die deutsche Version des Beitrags)

Episode six of a ten-part series in which heise/Autos looks at the Chinese car market. There, Chinese electric car producers - some of them strongly supported by the so-called Communist Party - are just warming up in order to soon roll up the domestic and international markets with a lot of momentum and a colorful bouquet of state-of-the-art cars. This is likely to have consequences for German car manufacturers, whose largest single global market has been China for several years.

On the one hand, this will foreseeably change the picture on German and European roads, but it will also have repercussions for German producers and their sales in China, the world's largest single market.

Things have been surprisingly quiet around Evergrande recently. For months, the Chinese real estate developer was not even out of the news because it has such high debts. The company is considered "systemically important," to use a term from the last financial crisis. In the midst of the chaos, Group CEO Xu Jiayin wants to change the core business. The current electric car subsidiary Evergrande NEV is to be made the star of the group.

Evergrande: Company boss under pressure

In Germany, Evergrande would have long been insolvent. The company has debts of 300 billion US dollars. The company regularly fails to make interest and loan repayments. The Communist Party has already forced Xu to sell two villas in Hong Kong for 105 million dollars so that he can repay interest. His private art collection is also already gone.

The fact that the company still exists is due on the one hand to its size. The effects of bankruptcy are not foreseeable. Even the Communist Party - which otherwise shows little restraint toward corporations - seems to shy away from a consistent crackdown here. In the summer, Chinese refused to repay their real estate loans on a large scale because there was no more construction activity. In the worst case, the banks were threatened with a loss of 350 billion dollars. Evergrande has since resumed construction work on 668 of 702 projects, including entire neighborhoods.

High hurdles for insolvency

On the other hand, this is also due to Chinese insolvency law. In the People's Republic, the criminal offense of delaying insolvency does not exist. Evergrande therefore does not have to file for bankruptcy. The creditors have to do that. In Chinese at the correct court. And that court has to accept the petition. These are far too high hurdles for foreign creditors. Attempts have already been made. But there is another reason for creditors to be cautious. In China, there is a special rule that employees have priority. They are served first from the insolvency estate. This further reduces the repayment rate.

Electric cars to save real estate group

But perhaps Evergrande will be saved after all. Because at the end of October, deliveries began of the Hengchi 5, a mid-size SUV with 150 kW that retails for around 25,000 euros. The manufacturer had reportedly produced around 100 units. There are said to be 37,000 pre-orders.

The Hengchi 5 is what is left of the group's electric car plans. Originally, Evergrande NEV wanted to have nine models on the market by now, from the Hengchi 1 to the Hengchi 9. What will become of the other eight is completely unclear. The target of one million electric cars in 2025 is also likely to be wastepaper. But the optimism has not faded. Two more models, the Hengchi 6 and Hengchi 7, are to be launched as early as next year. All of this is subject to the proviso that the brand will still exist then.

Tech companies looking to get into the car business

Although Xu had declared that electric cars would be the bankrupt company's core business in the future, market observers assume that the subsidiary will merely be spruced up in order to sell it better. The electronics manufacturer Xiaomi (cell phones, laptops, smartwatches) is reportedly interested in expanding its portfolio. The fact that technology groups are striving to enter the car market - in one role or another - is not uncommon in China.

Evergrande NEV once started with a bang. As a subsidiary of a real estate giant, investors and investors trusted the company. In April 2021 - as explained, the company had not built a single car at that time - the manufacturer was valued at 87 billion dollars on the stock exchange, making it more valuable than Ford or General Motors. However, trading has been suspended since spring 2022.

(fpi)