The Corona crisis is not without consequences for the Evergrande Group. The real estate giant anticipates an increase in losses and issues a profit warning. In view of an ongoing need to invest in electric car expansion, this is a worrying development. And there are details about Evergrande's first electric car.
The corona crisis is also a real estate crisis. Curfews reduced Chinese interest in condominiums to near zero, and companies moved online. Above all the Evergrande Group, which offered real estate at a discount of 25%. The group reported brisk demand, but analysts question how high the completion rate was in reality.
Profit warning for upcoming investments
On March 22, the Evergrande Group issued a profit warning after losses quadrupled. The company's share then fell to its lowest level since June 2018 and has since recovered only slightly. A loss of the equivalent of € 640 million is expected for the current year.
In the background are the continued high investments in the production of electric cars. In 2019, € 2.6 billion was made available, and almost € 2 billion were also firmly budgeted for the current year. Investments are expected to drop to € 2021 billion in 1.3. The Evergrande Group is sticking to its plans to present 15 new vehicles and to establish a production network of 10 plants worldwide. But the legitimate question arises as to how long you can hold out due to high liabilities and a troubled economy. Bonds maturing in summer and their refinancing will provide the answer.
In China, against the background of the Corona crisis and the open question of rapid global economic recovery, there are slight doubts about the plans. Yicai Global refers to failure to meet investment commitments Faraday Future. In April 2018, the Evergrande Group became the manufacturer's largest shareholder. Evergrande retired at the end of the year and brought the company into initial difficulties that resulted in a preliminary bankruptcy. In the meantime, Faraday Future is back and working with the FF 91 on a restart.
Evergrande's first electric car
Evergrande's first electric car will be presented in the first half of 2020. So far, information on this has not made it public. According to our information, a study should be shown at the canceled Geneva Motor Show. In contrast to other manufacturers, the presentation was not moved to the Internet. It is unclear when, where and whether the concept car that was not presented will be shown at all. But there are some pointers. It is said to be a medium-sized, all-electric SUV. Production will start in 2021, then maybe also in Sweden.