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.

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.