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The Chinese giant of electric cars worth 87 billion dollars has not sold the vehicle yet

(Bloomberg) – Spacious pop-up showroom China Evergrande New Energy Vehicle Group Ltd. is located in the heart of the Shanghai National Exhibition and Congress Center. With nine models on display, it’s hard to miss. The new electric car has one of the largest cabs at China’s 2021 car show, which starts on Monday, as opposed to German carmaker BMW AG. Still, his brave presence refutes the embarrassing truth – Evergrande has not sold a single car under its own brand. China’s largest real estate developer is investing in real estate, from football clubs to retirement villages. But the recent entry into electric cars has captured the imagination of investors. Shareholders have boosted Evergrande NEV shares from Hong Kong on the list for more than 1,000% over the past 12 months, allowing it to raise billions of dollars of fresh capital. It now has a market value of $ 87 billion, higher than Ford Motor Co. and General Motors Co. Such an excess over a carmaker who has repeatedly dismissed predictions of mass-producing a car is a symbol of the foam installed by electric vehicles over the past year, with investors investing in a set that briefly made Elon Musk the richest person in the world. and some worry about the balloon. Perhaps nowhere is this more obvious than in China, home to the world’s largest new energy car market, where stunning 400 EV manufacturers are now pushing consumers ’attention, driven by a calaud of startups that are valued more than established car players but have yet to make a profit.Evergrande NEV entered the scene relatively late. In March 2019, Hui Ka Yan, president of Evergrande and one of the richest men in China, promised to take over Musk and become the world’s largest EV maker in three to five years. Tesla’s Tesla Crossover Model has just had its global debut. In the two years since then, Tesla has gained an enviable foothold in China, setting up its first factory outside the U.S. and delivering about 35,500 cars in March. Chinese rival Nio Inc. earlier this month it reached a significant milestone when its 100,000th EV came off the production line, which Muska tweeted in congratulations.Read more: Nio, Xpeng exude optimism like EV’s Boom: Shanghai Auto ShowDespite its high ambitions and Evergrande NEV, Hui has repeatedly pushed back the goals of car production. The tycoon’s coterie of rich friends, among others, has stumbled upon billions, but the creation of cars – electric or other – is difficult and extremely capital intensive. Nio’s gross margins were turned to positive territory only in mid-2020, after years of heavy losses and a rescue municipal government. Speaking about the call for earnings in late March after NEV’s year-round EEV loss for 2020 rose by a yawn of 67%, Hui said the company planned to start trial production later this year, postponing from the original time frame of last year. September. Deliveries are expected to begin only sometime in 2022. Expectations of an annual production capacity of 500,000 to 1 million EVs by March 2022 have also been moved to 2025. However, the company has released a new startup forecast: 5 million cars a year by 2035. For comparison , global giant Volkswagen AG shipped 3.85 million units in China in 2020. It’s not just the delayed production schedule of Evergrande that raises eyebrows. A closer look under the company’s hood reveals practices that make industry veterans scratch their heads: from putting sales apartments in the line of key car performance indicators, to trying to set up a model that would be ambitious even for most established car manufacturers. “Strange company” “It’s a strange company,” said Bill Russo, founder and CEO of consulting firm Automobility Ltd. from Shanghai. “They have invested a lot of money that has not actually returned anything to them, plus they are entering an industry in which they have a very limited understanding. And I’m not sure they have the technological advantage of the Nio or Xpeng, ”he said, referring to Chinese EV manufacturers from New York who are already incorporating intelligent features into their cars, such as laser navigation. Evergrande NEV’s operations reveal the scope of his unusual approach. Although three production bases have been established – in Guangzhou, Tianjin in northern China and Shanghai – the company does not have an established and active line for general car assembly. Equipment and machinery continue to adapt, say people who have seen the factories but do not want to be identified and discuss confidential matters. In response to questions from Bloomberg, Evergrande NEV said that it is preparing machines for trial production and that they will be able to make “one car per minute” when full production is reached. The company aims at mass production and delivery next year of four models – Hengchi 5 and 6; luxury Hengchi 1 (which will oppose Tesla’s Model S); and Hengchi 3, according to people familiar with it. The company told investors it aims to deliver 100,000 cars by 2022, said one of the people, roughly the number of Nio units, Xpeng Inc. and Li Auto Inc., another Chinese candidate for EV, shipped last year together. Its workers are also being asked to help sell real estate, the backbone of the Evergrande empire. and have nothing to do with car production. In addition, employees from all departments, from production line workers to back-office office staff, are encouraged to promote apartment sales, either by posting ads on social media or by bringing relatives and friends to shopping malls to look busy. Management staff even have performance bonuses associated with such ventures, people familiar with the measure said. Meanwhile, ambitious goals are to turn Evergrande NEV to outsourcing and skipping procedures that are considered normal practice in the industry, say people who know the situation. Although it is aggressively engaged and recently achieved by Daniel Kirchert, former BMW CEO who co-founded EV startup Byton Ltd., the firm has contracted most of the design and research and development of its cars with foreign suppliers, some people said. Contracting most design and engineering work is an unusual approach for a company looking to achieve such a scope.14 Models at once One of these companies is Canadian Magna International Inc., which leads the development of Hengchi 1 and 3, one of the people said. Evergrande NEV has also teamed up with Chinese technology giants Tencent Holdings Ltd. and Baidu Inc. to jointly develop a software system for the Hengchi range. It will allow drivers to use a mobile app to direct cars to autopilot to a specific location and use artificial intelligence to turn on devices at home while on the road, according to a statement last month. An Evergrande spokesman said that working with international partners, including Magna, EDAG Engineering Group AG and Austrian parts manufacturer AVL List GmbH, was developing “14 models at a time”. Representatives of Magna declined to comment. A Baidu spokesman said the company had no additional details to exchange, while a Tencent spokesman said the software venture at a related firm called Beijing Tinnove Technology Co. which operates independently. Tinnove did not respond to requests for comment. Instead of stunning model releases, it seems that the Evergrande NEV suddenly launches all types of cars under its Hengchi brand, which has a roaring golden lion on its badge, which means unstoppable gallop. ‘The nine models launched cover almost all major segments of passenger vehicles, from sedans to SUVs and multi-purpose vehicles. Prices will range from about 80,000 yuan (US $ 12,000) to 600,000 yuan, although final costs could change, a celebrity said. It is a completely different product development strategy from EV pioneers like Tesla, which has only four models on offer. Nio and Xpeng have also decided to focus on just a few markers, and even then they struggle with breaking into black. “The market has proven the effectiveness of the‘ one product in vogue at once ’strategy,” said Zhang Xiang, an automotive industry researcher at North China University of Technology. “Evergrande offers a lot of products and expects to win. There is a question mark as to whether this will work. “Without any long-term products, Evergrande has issued uncompromising directives to meet its latest production goals, people say. Two models, including the Hengchi 5, a compact SUV that rivals Xpeng’s G3, target mass production in just over 20 months. To achieve that moment, certain industrial procedures can be skipped, such as making cars with mules or testing vehicles equipped with prototype components that require assessment, people familiar with the situation said. Evergrande told Bloomberg that he had entered the “sprint phase towards mass production.” As it is, Bloomberg could only find one case where Hengchi 5 was shown in public, in photos and granular footage published by Evergrande in February as cars were driving around. a snow-covered field in Inner Mongolia. The company’s shares rose sharply. Watching those steps is unusual, said Zhong Shi, a former automotive project manager who has turned into an independent analyst. “There is a standard engineering procedure for product development, validation and verification, which includes several laboratory and travel tests” in China and elsewhere, Zhong said. “It’s hard to sum it up in less than three years.” While there is no suggestion that Evergrande’s approach violates any regulations, its stock market could be verified in reality. After similar hefty market gains, some US startups in the U.S. that have yet to prove their viability as profitable revenue-generating entities have lost their luster over the past few months due to concerns about estimates and how established carmakers like VW are accelerating they start in EV fuss .Read more: The end of Tesla’s domination may be closer than it seems. The multiple wave in the industry also did not escape Beijing’s attention. Shares of Evergrande NEV fell lower last year after an editorial by state-run Xinhua news agency raised concerns about the development of the electricity sector. Of particular concern are companies eluding responsibility for building quality cars, the blind race of local governments to attract EV projects and the high ratings of companies yet to deliver one mass-produced car, according to a mission that named Evergrande specifically in that regard. “The huge gap between production capacity and market value shows that there is an oversupply in the NEV market,” it states. Still, shares of Evergrande NEV have risen 18% since then, driven by the outlook for the Chinese electric car market. Data on electric vehicles currently account for about 5% of annual car sales in China, according to BloombergNEF data, with demand forecasting that demand will grow as the market matures and electric car prices fall. EV sales in China could climb more than 50% this year alone, research firm Canalys said in a February report. With increasing competition, some outside Evergrande NEV’s loyal shareholder base remain suspicious. “The market is getting crowded, but if you don’t have a preferred lane, there’s not a good chance of winning,” said Russo of Automobile. “There may be some synergy with real estate, but right now it’s an EV story, and it’s quite expensive.” For more articles like this, visit us at Subscribe now to stay in the lead with the most trusted business news. © 2021. Bloomberg LP