The Evergrande crisis becomes an issue in Trollhättan

The Evergrande crisis continued to smolder last week. In some places it was even blazing and S&P (Standard & Poor's) gave the China Evergrande Group another one Downgrade. China Evergrande and the subsidiaries Hengda and Tianjin Holding were downgraded by two notches from B- to CCC by the rating agency. From now on, company stocks are considered "extremely risky".

Test production at Evergrande
Test production at Evergrande

Evergrande liquidity eroded

The reason for the renewed downgrade is the increasingly eroding liquidity of the group. Meanwhile, Evergrande is trying to counteract this by selling real estate and investments. However, in the opinion of the analysts just drops in an ocean of debt.

As the week wore on, more and more companies filed lawsuits over unpaid bills. According to reports from state media, the lawsuits will be dealt with centrally at the Guangzhou court. Previously, legal recourse had been taken in the respective provinces.

Further developments are eagerly awaited. Is Evergrande too big for the final fall and will Beijing intervene in some form? In the course of the week, the social (Chinese) media made the rounds that the administration sees the crisis merely as a kind of “stress test” for Evergrande, that neither intervention is needed nor bankruptcy is in the room.

At the moment it doesn't look like Evergrande will survive the “test” without help.

Ever Grande Auto Hengchi 5
Ever Grande Auto Hengchi 5

Evergrande sticks to auto plans

In the meantime, and with a considerable delay, the crisis has also become an issue in Sweden. Dagens Industri (DI) berichtet about the mountain of debt and the sale of company shares. Is the sale of the former Saab factory and NEVS an issue? No, it's not, says Stefan Tilk, CEO of NEVS to DI. He had not received any signals from China that would indicate a sale or reduction of the investment in Trollhättan.

And: NEVS is important for the implementation of the electric car plans.

NEVS is completely dependent on payments from China. The company does not have an independent business model, its services are primarily provided for Evergrande Auto. Other income generated with third parties has so far not been enough to cover the costs of almost 800 employees.

Is it realistic to stick to the car plans while the regular business is close to the brink? Especially against the background that investments in the billions are due before the business will pay off. There are experts who see it that way. That the group is significantly reducing its real estate business, but is still investing in the construction of e-cars, estimates Frederic Cho, chairman of the China Sweden Trade Council and independent China expert as realistic.

6 thoughts on "The Evergrande crisis becomes an issue in Trollhättan"

  • blank

    What happened to the NEVS car factories in China?

    And the NEVS 9-3 EV?

    And from the NEVS PR department?

    You don't seem to have your own ambitions anymore, right? You are the property of Evergrande with skin and hair, with man and mouse, right? And now you look like a mouse at the snake and see what's coming? Can you put it that way or does NEVS still have a life of its own?

    • blank

      Yes what has become The NEVS 9-3 EV will never hit the market. Its production was only for internal purposes. You can also say that time has passed over the concept. The NEVS factory is now an Evergrande factory and has been rebuilt for higher volumes.

      And Ulrika left NEVS a few weeks ago, public relations is now done by a long-time former Saab manager (and he does it well). We were only in contact today.

      • blank

        Thanks Tom.

        I don't know how you manage to keep in touch with blog readers and former Saab managers on the same day, but somehow you manage ...

        Thanks again for that answer.

  • blank

    A stress test that is not simulated can end fatally .... well, if it happens, Mr. Anders Warming buys the rights to the Hengchi 1 from the bankruptcy estate and desings it to the SAAB and Königseeg produces it in Trollhättan

  • blank

    A China thriller! Perhaps Evergrande will still sell and NEVS will fall into other hands. Then the cards would be reshuffled (again). Exciting!

  • blank

    the basic question - what are these 800 workers doing there and what are they paid for. there, since 2011, you can hardly see any effects.

Comments are closed.