Production should actually have started in the 3rd quarter of 2021. In 2022, Hengchi brand electric cars should have been produced and sold in large numbers. The schedule can no longer be kept, as the Evergrande Group announced on Monday. Liquidity is tight. Without fresh capital there will be no production. The competitors show how to raise liquidity in an elegant way.
It's no surprise that Evergrande Auto's schedule rejects. The automotive start-up is currently not receiving any new funds from the group. That still has some liquid reserves, but is only financed for a reasonable period of time. According to the company's own statements, liquidity is not sufficient for all obligations entered into up to the end of the year.
Ambitions just too big?
Future funding from the Evergrande mother seems impossible. New investors or a major shareholder are still not in sight. Perhaps the bet on the Hengchi brand, with more than a dozen new electric cars, was just too big. Even the largest auto companies do not trust themselves to be able to carry out parallel developments of this magnitude in such a tight time frame. Not to mention a newbie who has no expertise in the auto business.
It could be that you have simply gambled yourself away at Evergrande, and that no investor wants to get into the existing obligations in an unknown amount. Because normally it is not a big problem to advertise new liquidity for an electric car adventure.
Others show how to do it
The Geely Group provides an example. Their new electric car brand "Zeekr" got off to an ambitious start, but one size smaller than Evergrande and Hengchi. The purely electric "Zeekr 001" was originally intended to be a high-end offer from the Geely and Volvo brands Lynk & Co. In China, a decision was made at short notice and another new car brand was born.
For the future development of the brand, which is now valued at US $ 9 billion, US $ 500 million has been raised in the last few days. Prominent investors are Intel and the battery manufacturer CATL. the Investors hold 5,6% of the shares in "Zeekr". If “Zeekr” becomes a successful model, the investment has paid off.
Of course, the comparison is not entirely correct. In contrast to Evergrande Auto, the Geely Group successfully builds cars and the orientation of “Zeekr“Is relatively clear. Which makes it easier for investors to give money and accept a high rating than for a brand with the name "Hengchi", whose philosophy has not yet been revealed to anyone and whose planned numbers are at least questionable.
With images from "Zeekr"