Evergrande Auto - is the hype over again?

Is it over before it really started? Evergrande Auto's share price currently only knows one way. And that leads south. Since the high in February, the share price has more than halved. Gone are the days when Evergrande was worth more than GM or Ford. And there are other worrying developments.

Hengchi 1 from Evergrande Auto
Hengchi 1 from Evergrande Auto

Evergrande presented 9 models for the first time at the Shanghai Auto Show. It could have been the first big appearance of the Hengchi brand, there were 3 world premieres alone. Hengchi numbers 7, 8, 9 were shown, two sedans and one SUV. The media response in China remained strangely muted. There was a Hengchi live show on TV that lasted about 30 minutes. Selected interested parties were allowed to drive an electric SUV on a set course and dutifully praised the product and its qualities.

Share price more than halved

There were no details on the three world premieres, technical data, prices or even statements on market entry. The press largely ignored the appearance, which must always be seen as a bad sign in China. Evergrande Auto's share price has only found its way down since April, hitting a new low of 35 Hong Kong dollars (approx. € 3,70) yesterday.

The imagination of a possible Tesla challenger has given way to skepticism. Will Evergrande Auto take over with the development of 14 model series in the same period? An undertaking that not even the established competition dares to undertake. Will it be possible to bring Hengchi 1 onto the market in the targeted quality at the beginning of 2022? Because the company has no expertise whatsoever in the production of cars. And how do you intend to finance the expansion that will require billions in the medium term?

Meanwhile, Evergrande's parent company remains under the scrutiny of the authorities and under pressure to reduce debt. As before, the group has to send regular business data to the central bank report, the scope for investments and excursions into new business areas is limited. The administration has put a stop to speculation with real estate and living space, the situation is uncomfortable.

Evergrande Auto - share price more than halved
Evergrande Auto - share price more than halved

Investigation at the wrong time

Authorities are currently investigating a US$15,63 billion transaction between Evergrande and Shengjing Bank. The bank is small and actually insignificant, but the transaction is strikingly high. Explosive: Evergrande holds a 36,4% stake in the institute, the authority does not provide any details about the type of transaction.

The news of the investigation into the transaction alone was enough to cause the Evergrande Auto share (HK 708) to plummet by 7,89% yesterday. Has the Evergrande Auto hype been over before the first product has found its way to the customer?

In Sweden the development is being followed closely. NEVS is dependent on the flow of money from China, the company does not generate any significant amount of its own funds. Ongoing costs and investments are covered by transfers from Evergrande, a marketable business model or product is not within reach even in year 9. The further development at Evergrande Auto is also crucial for the future at Stallbacka. If Evergrande wobbles, a storm can approach in Sweden.

17 thoughts on "Evergrande Auto - is the hype over again?"

  • blank

    Anyone who has ever been to Trollhättan knows that these 800 positions are also very important.
    Economically, since the loss of Saab and its suppliers, Trollhättan has long been dead or just as insignificant as Kalmar, Halmstad and Co.
    Wasn't there even the prospect that the factory would be used for the wind power industry and the like?
    Sweden and especially what happened to their industry after 2000 (Ericsson, Glasreich, Holzindustrie and Co), leaves only the assumption that the Swedes have watched idly and now nothing is left of it / or little is left.
    As for China ... you should live high and stick to the ground at some point.
    It's just a lot higher and fire there.
    Let's see how long that will go well.
    With this in mind, have a nice evening

  • Actually, there is nothing more to say about it. No, I can't say anything more for myself. I read again and again when it came to Evergrande and NEVZ, but the interest has now died. Too much back and forth. And 800 jobs are a shame, but it's not a downfall for a city either. She will survive.

    • blank

      Is basically similar to me ...

      But I was already affected today. In relation to the number of inhabitants, 800 jobs in Trollhättan correspond to around 64.000 jobs in Berlin ...

      That's a number - here and there. The topic annoys me too, but still, and especially today, I thought it was completely okay.

      Anyone who drives, has driven one or different Saab and has been to Trollhättan / the museum cannot help but be concerned and empathetic, right?

      • yes, for God's sake, I am with you and with Tom too. I don't mean the report and of course I am fundamentally sorry that people are losing their jobs. And the connection with Trollcity is absolutely correct and understandable. I'm only interested in Evergrande and NEVZ. I'm not interested in either of them anymore.

    • We are moving further and further away from this topic. The similarities are dwindling and if the bitter charm of Trollhättan wasn't so close to my heart, then this topic would have been through long ago.

    • blank

      I find it exciting, it is the continuation of the business crime that we have already experienced at SAAB and that in a new era with new actors. Otherwise I would have no connection to economic life in China.
      Above all, it teaches me one thing, we as consumers do not have the power to influence the market according to our wishes, that was the case with SAAB under GM and now even more so.
      So, Tom, please continue to report, thank you!

      • blank

        The teaching

        I'm not quite sure …
        There are already enough examples from democracies that consumers are patronized and have only a very limited influence. That's everyday life, it's daily experience and suffering ...

        For me it has no added value, does not bring me any new knowledge, if totalitarian China can do that too ...

  • It's just China. The general question is whether Evergrande / Hengchi still has goodwill from above. Nothing of this magnitude, by which I mean the loss in price, happens by chance. Whether or not it is a sensible strategy to let another electric car manufacturer loose on the world is next. With all the new brands from China that are rolling out, this is really a point of discussion.

  • blank

    At Tesla, too, the share price tends to move sideways and south rather than up.
    Although Tesla builds and sells cars, the pure car division is not profitable either.
    Tesla makes a profit, but not with cars….
    Greeting André

    • Tesla successfully markets emission rights. A business model that will erode. Stellantis (ex FIAT / Chrysler) will no longer be there in the future and will get along with the new group. VW will continue to pay for now.

      • “And there they were our three problems again” ...
        Actually, I think it's really bad even though “no” car is really on the market yet - even the possible stock exchange prices decide how a company and its products are suddenly placed in the business world !?
        What influences the stock market prices nowadays has not been revealed to me personally for a long time - I'm certainly not alone in this world ...
        The only thing that is bad for me is the possible fate of the employees and their families
        Was it an ice cold business where people only play a secondary role - unfortunately it was !?
        What does it help - wait and see.

        In order not to be considered notoriously yesterday (we still SAAB drivers), I let myself be persuaded at the beginning of this week to also face the green alternative mobility - that is, to do an id3 test.
        To anticipate - I will continue to be a Saab driver ...
        Yes id3 - I was really impressed by the response / torque of the engine (or whatever you call it) - very pleasantly smooth and agile.
        But that's it for me - for example the “fittings” - a sign of poverty for every designer - two tablets somehow listlessly “screwed on” afterwards - no feel-good factor - only functional ...
        The whole car triggered ZERO emotions in me - what a shame ...

        I will of course continue to follow the development with interest ...

  • blank

    Wiggling in the storm

    Is it really that dramatic for Sweden?
    It's no longer about Saab, about no ongoing production that could be stalled ...
    Therefore not about suppliers and only a few jobs in the plant.

    I thought the storm was long behind us. If not with the end of the VM era, then at the latest since the last 9-3 ran off the tape under NEVS and naming rights were withdrawn?

    Much worse than it is, it can't come anymore, can it? How many jobs in S depend on Evergrande?

    • If it really wobbles, then 800 places wobble.

      • blank

        More than I thought.

        In relation to the population, this corresponds to around 6.500 jobs in D. That's something ...

        Thanks for the info.

      • blank

        and what these people are doing what they are working on. just as good a question people have been asking since the saab collapsed in 2011

  • blank

    This hype is certainly caused by some gamblers. What matters is getting products to market and making money. Looking at quarterly figures, or worse, the share price, is unimportant for long-term development. If Evergande adheres to the schedule it has set itself and the cars are not worse than Tesla's then they already have an advantage ... and if at some point a technically innovative product called SAAB comes off the production line in Sweden (see e.g. SAAB-x_ray https://warming-design.com/portfolio/saab-x_ray/ ) then I like to winter with my SAAB scrap metal

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