The news from Trollhättan is bad but not unexpected. Production will stop for a while and NEVS has short-term liquidity problems.
In a nutshell: Shareholder Quingdao, who has a 22% stake in NEVS, has not yet fulfilled his commitments to provide liquidity. For this reason, National Modern Energy Holdings Ltd. has been financing since the beginning of the year. from NEVS founder Kai Johan Jiang the operations in Trollhättan alone. However, one is not able to transfer the corresponding funds from China to Sweden in the required time.
NEVS will therefore seek and use short-term bridging finance to bridge liquidity problems. The existing liabilities should all be covered. In response to this, it is rumored that for the time being 4 weeks will be suspended and the number of external consultants will be reduced.
The news is grotesque, and at today's Saab production stop, I have a déjà vu of events from the year 2011 in mind. Even if the news does not hit me unprepared, at this point I would not like to write about the situation in Sweden and at NEVS.
The press release from today in full length:
"National Electric Vehicle Sweden (Nevs) is preparing an extensive investment to develop a new platform on the Phoenix architecture, which will be the base for future car models. This development will be done in cooperation with other global OEMs. These collaborations involve sharing cost of development and reduced costs of components through significantly higher volumes.
Nevs has recently signed a frame agreement with a major international automotive OEM. A negotiation with another major automotive OEM is therefore taking place for part ownership. Saab as a global premium car brand name. The partnerships wants to contribute to secure the development of new products and distribution on a global basis.
Even if the long term perspective of Nevs remains very exciting and it is a short term cash problem.
The root cause of the current situation is that of Nevs' shareholder, Qingbo Investment Co. Ltd., has not fulfilled their contractual obligation to finance the operations.
As a consequence Nevs' main owner National Modern Energy Holdings Ltd. (NME) has since the beginning of the year decided to enter the position as the sole financier of the company. Recently, it has not been able to capitalize on its assets in China. This has been done in a time between the financing from China and the need of cash to pay suppliers. As of today NME has transferred over 3 Billion SEK to Nevs and made large investments in China, ie in the new battery factory and the technology development center.
It is important to state that the assets are much higher than the debt. This is bridge solution is planned to be realized in a near future.
To further support the situation financially and give Nevs time to align the strategy with the new OEM partners Nevs will also take short term measures to reduce cost. Among the measures to be taken are a short term stop of production, which today is six cars per day, and a reduction of hired consultants. "
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