What about the future of Evergrande Auto?

The past week has been difficult. Evergrande was under pressure, the real estate sector in China is behind the speculative times (for the time being). The administration regulates all the way down to the private investor, whose options are increasingly curtailed. That may be correct from the point of view of the party. Because living space in China should be both protected and affordable. A discussion that will not be alien to Germans either. The blog is about the future of Evergrande Auto, and thus the future of Trollhättan.

Does Evergrande Auto stand out?

Evergrande parent company's stock (HK 3333) also only found its way down Thursday and Friday. The price losses were not as dramatic as in the days before, but they continued. Evergrande Auto (HK 0708) was remarkable. The share moved away from the downward trend and emerged victorious on both trading days with slight price gains.

The picture did not change on Monday. Evergrande Auto rose by over 9%, making up for the price losses of the last 5 days. The parent company also turned positive after seeing the Sales announced by parts of the Internet business.

The reasons for the stability and the price gains of Evergrande Auto are manifold. While Beijing's real estate sector is being “forced-cooled” and its heyday is probably behind it, all-electric mobility basks in the rays of government subsidies. The future bet is on offering mobility. The Evergrande Auto Group has something to offer here. On the plus side, there are almost finished and ultra-modern car factories that are equipped with the best equipment that German and international engineering can deliver.

At least one vehicle is about to be ready for series production and the “state of the art” assumption also applies here. The latest technology is used - the best that international service providers can offer. In addition to Hengchi 1, another 4 new models are entering the Summer tests and are about to be ready for series production.

Other assets are high-tech companies in the UK and the Netherlands that are part of the Evergrande Auto portfolio. In addition, there is the Trollhättan location, with its development capacities and the possibility of manufacturing in the middle of the European Union. Evergrande holds a stake in Koenigsegg through NEVS.

But, that's not all. Another participation is also interesting.

Faraday Future

After the successful debut of Faraday Future (FF) at the Nasdaq, there is also a little imagination in the Evergrande papers. Evergrande Auto holds 20% of the shares in Faraday Future, and the company plans to deliver the first vehicles within the next 12 months. The 300 pieces of the FF91 “Futurist Alliance Limited Edition”, which could only be purchased by invitation in person, are already sold out.

FF CEO Carsten Breitfeld, an ex-BMW manager, wants to deliver 2022 vehicles in 2.400, and 2023 in 38.600.

Capital needs in the near future

There are plans to go public with the Evergrande Auto Division and raise fresh money. There is probably no alternative to these, because the next steps towards production require a high level of capital expenditure. It doesn't just exist in China, but also in Sweden.

Parts for the expanded production of Koenigsegg are to come from the old Saab plant in 2022. Preparing for contract production for Sono Motors is also on the list. With the capital requirements that will have to be met in the near future, there is also a certain amount of uncertainty. The schedules could be corrected or completely revised. The future of Evergrande Auto remains open. But it differs significantly from the parent company's perspective.

With images from Evergrande Auto and Faraday Future