Evergrande Auto Suspends Payments - Is It Over?

The last few days have seen a lot of drama for Evergrande Auto (HK 0708). The company stopped making payments to suppliers and employees. The share price developed accordingly and recorded high, double-digit losses. On Friday the stock was trading at just HK $ 2,23. Miles away from the price a year ago which was HK $ 72,45. Is it now over with the big plans of the Evergrande Group? Not quite yet, all possibilities are being exhausted, as reports in the Chinese media show.

NEVS 9-3 from Chinese production in Sweden
NEVS 9-3 from Chinese production in Sweden

Stock options for employees

The situation is dire, but the Evergrande Group is trying to save the investment in the mobility business. In doing so, she re-enacts Setting of payments to suppliers and employees, a desperate game. According to reports in Chinese media, Evergande Auto is offering 3.180 employees stock options to encourage them to stay. 323 million share certificates are available, redeemable from March 20.03.2022, 3,90 at a price of HK $ XNUMX per share.

A daring bet on an uncertain future. It is completely open whether the employees will accept the offer.

Time is running out (China)

On Friday, the Chinese media published a statement from Evergrande Auto, which draws attention to a timing problem. In order to continue operating Evergrande Auto, the company needs fresh financial resources. Without their inflow, all projects, the payment of outstanding salaries and the start of production are not secured.

The impending end of Evergrande Auto and Hengchi would be the third spectacular departure of a Chinese car brand after Byton and Bordrin.

Time is running out (Sweden)

Depending on how the further development in China will be, it will affect the future of Trollhättan. There the management is resisting the possible end of the company. A possible sale or the entry of an investor would be endangered by the bankruptcy of the Evergrande Group. Creditors could try to secure and realize the European assets like NEVS or Protean. An orderly transition would be very difficult to achieve under these circumstances.

The pressure on the management of NEVS is therefore increasing, time is running faster in Sweden than those involved would like. The future of NEVS hangs by a thread.

9 thoughts on "Evergrande Auto Suspends Payments - Is It Over?"

  • blank

    That is probably it. Unless a white knight comes around the corner. But I don't believe in it.

  • blank

    I think more and more that Evergrande wanted to look for a new playing field with the car division and that their real estate card house collapsed too early. Gambling turbo-capitalism meets dictatorial party cadres and again it hits the Trollhättan region. Well we are (unfortunately) only spectators again. In view of this and other processes, I advocate functioning economic cycles at the regional level, which is perhaps also more ecological and more resistant to crises.

    • blank

      Producing regionally or nationally is the order of the day. Not just since Corona and you can only keep your fingers crossed for Trollhättan (once again).

    • blank

      When I think about it for myself, I'm GLAD to be “just” a spectator!
      This back and forth in Trollhättan costs nerves, energy and certainly additional sKr. for individuals / families. Approx. 10 years of economic / existential stress in the region.
      There must have been difficult decisions made in the families ...
      I think the thesis about gambling is worth a thought ...
      This is how unsightly capitalism at least trips itself. 🙂
      However, to the suffering of people thinking about an apartment.

      • blank

        @ Aero-93
        that we are just spectators aims more to illuminate our role as consumers who cannot really influence what happens in the economy. I can only buy meat from happy cows when it's on sale, I can only buy a safe Nordic cool designed car when it's on sale. .... and that a company that builds sustainable cars does not fit into the global economy. Not to American corporations and not to Chinese either.
        By the way, yesterday on a third program there was a contribution where two men keep a Porsche 924 alive and use it as a daily car, as well as a man with an old Jaguar. At that time, the thesis that was also put forward here was that you can't save as much energy and material with a new car as you can with keeping an old one. … ..And for the regional economy the receipt is anyway more lucrative.

        • blank

          In this context I am there :-)!
          Saabige greetings ...

  • blank

    Desperate game

    Indeed, that sounds truly desperate. I'm curious what will happen next. And for how long. There's no flagpole left, the end of which has yet to be reached ...

    Didn't think the CCP would allow such a drama of this dimension in its republic and economy. Not with such a prestigious project with the potential to nurture national pride. Not so supposedly shortly before the finish line.

    Can you explain it differently, or is Evergrande just not half as advanced and the prototypes just not half as good as they should be?

    • blank

      The answer will be: gambled away! China simply has too many car factories and too many EV manufacturers. A nice opportunity for the administration to cross one off the list.

      • blank

        Is China really so far that they have an oversupply of internationally competitive national automobile manufacturers?

        I'm not deep enough into the subject, I can't judge it. But it would surprise me very much. They cannot be found in western markets. The civil and state-owned aviation industry has not wanted to take off for ages and despite government funding.

        So far I have always perceived the automotive industry in China in such a way that on the one hand there was an oversupply of brands, but on the other hand there was also no promising offer. Regulation seems to be absolutely necessary. Evergrande seemed to me a candidate for the approval of the administration. You can be mistaken ...

Comments are closed.