Options dissolve - Evergrande Auto's future remains open

In China, the Evergrande Group is a big topic that is only slowly making its way into Europe. The future of the group remains open, the situation is complicated. In the last week, the credit rating was repeatedly downgraded. Liabilities cannot be serviced within the deadlines. Existing loans will be renegotiated.

Light tunnel Evergrande Nansha plant
Light tunnel Evergrande Nansha plant

The Evergrande Group is not alone with these problems. The tough change of course in Beijing affects almost all real estate developers. The boom phase, fueled by cheap money and generous lending, is over. The Chinese capitalist casino also shows its ugly side. Buyers of properties that have not started construction are in despair. On Friday, social media showed suppliers and customers in an Evergrande building that somehow want to save their money.

Aside from human drama and economic upheaval, there are two developments that should pique our interest.

Xiaomi builds electric cars

It's a kind of dam breach. The smartphone manufacturer Xiaomi is entering the mobility business and is openly committed to it. A battery electric car is a mobile device with usually 4 wheels, and it was only a matter of time before the first smartphone manufacturer would get on board. Apple has been speculating for years, Xiaomi will do it from 2024.

Then the world will be able to buy the first EV that a mobile smartphone is “Made by Xiaomi”. The question of who will follow suit next is exciting. Maybe it's Apple.

The decision could be a setback for Evergrande Auto. the speculationthat Xiaomi could join as a major shareholder and savior is almost off the table. Not completely, because the smartphone manufacturer needs factories and know-how. Speculation of buying an underutilized Hyundai plant was rejected last week. Perhaps Xiaomi will secure one of the almost finished Evergrande works at a discount price.

And one or the other well-developed electric car project at the same time.

Overcapacity in electric cars

It's an old story actually. For what feels like forever, the administration in Beijing has been trying to cut excess capacities in the auto industry. Instead of many small manufacturers, people have been dreaming of a national champion who dominates the automotive industry internationally for years. So far without success, the only Chinese manufacturer with world renown comes from Sweden and bears the name Volvo.

Currently, attracted by generous subsidies, several Chinese companies are about to jump to Europe. MG (SAIC) is already very successful in Sweden, Great Wall wants to start with the brand Wey and Ora this year in Germany and the NIO ES8 surprises with excellent values ​​in Euro NCAP Test.

In fact, Chinese brands are now scoring points in terms of price, performance and design. You can add around 10 years of lead in terms of e-mobility and suitability for everyday use. When it comes to battery technology, China is at the fore anyway. Great Wall supplies cobalt-free batteries, while NIO leads entire battery packs when it comes to changing technology. Once the European consumer has registered this, it becomes tight for domestic manufacturers.

The arguments not to buy a Chinese EV are disappearing.

Nevertheless, China has a problem with overcapacities and factories that are underutilized or stand in the landscape as investment ruins. Beijing wants to tighten the thumbscrews (once again), reports Bloomberg. In the future, capacities are to be used more effectively and factories could be forced to close. Approval for new projects will be harder to come by.

The plans are not final, but could also affect Evergrande Auto. Huge capacities that nobody really needs and a large range of models that would exacerbate the problem of oversupply. A candidate to provide an example. The possibility to do so, it is in the room.

6 thoughts on "Options dissolve - Evergrande Auto's future remains open"

  • blank

    The subsidy craze will continue after the election. The Greens want an increase in the electric car premium. China is happy 🙂 We are sure not to save the world with more and more cars and more and more production. Discover the bug 😉

  • blank

    "The arguments not to buy a Chinese EV are dwindling." ???

    OH (well, at least for me personally)!

    Namely: CHINA !!! 😉 ;-(
    (and even more, if their cars will then even run on their own “Chinese” software ... shouldn't that be the case with Volvo / Polestar soon?)

    • blank

      Nor do I speak for myself or the readers. It's about the broad masses who are supposed to save the climate with electric cars 😉

      • blank

        Well said …

        The article and answer are conclusive to me. And it remains exciting in China. The CCP seems to be torn between myself ...

        On the one hand, you share the fantasy of (international) dominance with your national corporations, on the other hand, you perceive dominance as a threat to yourself at the national level. Here the cat bites its tail. What China (the CCP) really wants are corporations that dominate internationally but have little to say at the national level ...

        There is only one problem with that. The world is bigger than China and not the other way around. The CCP should firstly understand this, secondly internalize it, and thirdly act accordingly - above all economic and political insights, preferably on the level of human rights.

        • blank

          It seems that communism has been rediscovered in Beijing. The campaign “Prosperity for All” is running and for this the CP also accepts collateral damage. The real estate sector is brutally trimmed, technology corporations trapped and the CP intervenes more directly in people's lives. It is unclear to me how the regulatory efforts should go hand in hand with the targeted international expansion of various industries.

          I guess I just don't have the imagination or the statesmanlike foresight.

          • blank

            Also a possible interpretation.
            Personally, this campaign seems more like a fig leaf for countermeasures and fear of the Communist Party.
            Fear of bourgeois fantasies based on economic strength, of ever being able to and being allowed to participate in politics other than loyal to the line. And this fear is justified.

            Russia and Europe provide the CP with many examples from recent decades and several centuries at the same time that traditional and absolutist power structures of workers, peasants and minorities are hardly threatened.

            These can be played off against each other or suppressed. No problem. It is the economically successful forces of a society that can hardly be brought into line and to which, historically, concessions have repeatedly been made. Many a democracy has its origin here. One or the other even without any bloodshed. An absolute horror scenario for the CP.

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