Evergrande Auto dares a fresh start and finally gets the production license for Hengchi 5 LX. As early as November 2021, Chinese media reported on the licenses granted. Then in December disappeared both Hengchi 5 LX types surprisingly from the official MIIT lists. The background remained in the dark, the chaos around the Evergrande real estate division had probably become too intense for the authorities.
Production license for Hengchi 5 LX
Without licenses, the start of production was the same as Evergrande in January celebrated twice, totally worthless. Because without a license there is no sale to customers and meaningless production. Last Friday, the MIIT reported the surprising release for both Hengchi 5 LX versions (HDE6470BEVA1F and HDE6470BEVA0F). This clears the way for Evergrande Auto on the Chinese market.
For the Hengchi brand, it is perhaps the decisive moment. If production starts, the quality is right and all the software features of the electric cars are available, a lot has been gained. If sales work and the brand can inspire customers in the next few months, then Evergrande Auto will also be of interest to investors.
Trust in Evergrande Auto?
So far there has been no sign of a new start on the stock exchange. On the contrary. The stock (HK 0708) was unimpressed and investors appear to have little confidence in the new car brand. Perhaps the crisis in the Evergrande real estate division has eroded the group's image too much. How Chinese customers react if they buy an Evergrande car could be an insightful experience.
In the background, Hengchi 6, Evergrande's second electric car, which is said to be ready for production, is already waiting. A license does not yet exist and it is also not clear whether the suppliers are willing to manufacture the components in large quantities. The next few months will be exciting. The electric car market in China is highly competitive. Newcomer Hengchi competes against NIO, Xpeng, Tesla and Geely and many more brands.
Competition has the edge
Especially the innovative brands like Geely (with the sub-brand Zeekr) or Xpeng are a lot further than Hengchi. Xpeng is already present in Sweden and has secured the support of the Bilia Group. Then last week the next big coup from Xpeng. Together with the Emil Frey Group starts sales in the Netherlands. Or, to put it more precisely, the conquest of the European markets by Chinese newcomers is already underway, while Hengchi's gears are still crunching enormously.