China Evergrande Group’s financial woes have spilled over to Sweden, with a unit of the company’s electric vehicle (EV) arm in talks to find new backers after cutting 300 jobs.
“I’m acting as if things won’t be working out with Evergrande,” Stefan Tilk, the CEO of National Electric Vehicle Sweden AB, also known as NEVS, said in an interview. “Therefore we have entered discussions with new intended owners or project financiers.”
He declined to name them, citing non-disclosure agreements.
Chinese property developer Evergrande is battling to stay afloat as it contends with more than US$300 billion in liabilities. The fallout has rippled through China’s economy and global financial markets, and its Hong Kong-listed EV arm is also facing a battle for survival.
Evergrande New Energy Vehicle Group Ltd (NEV) has missed salary payments to some employees, fallen behind on paying suppliers and even stopped free lunches for workers at its research center. As recently as April, it was valued at more than the Ford Motor Co, before a precipitous decline that wiped out almost US$83 billion in market cap.
NEVS in August gave termination notices to nearly half its 670 workers at the former Saab factory in Trollhattan. There is “no major activity” in the plant, Tilk said.
“The Evergrande situation triggered the decision,” he said. “These are things I had wanted to do for some time, but now it became necessary, given that Evergrande no longer can finance us.”
Tilk said his unit still has money to pay its workers. “I can’t give an exact date, but we can still manage,” he said. “We are talking beyond a few months.”
Evergrande NEV last week warned of a “serious shortage of funds,” making it likely to miss its delayed target of starting mass production next year. The closest the public has come to seeing the cars is the nine models it had on display at flashy exhibit at April’s Shanghai auto show.
As NEVS has a license to manufacture vehicles in China, and a factory in Tianjin, Tilk is resting his hopes on the company being able to play a key role in Evergrande’s ambition to bring a car to market.
“If there’s an asset they own outside of China that they care about, it’s NEVS,” Tilk said. “We are an essential piece of the puzzle for them to be able to manage their venture. The question mark is whether they have enough funds, stakeholders, if they’ll be able to invest further. I don’t know.”
NEVS was founded in 2012 and bought Saab’s assets out of bankruptcy, before running into financial difficulties of its own. It put production of its Saab 9-3 on hold in 2014 before entering into debt reorganization that lasted almost a year.
Evergrande first invested in the company in early 2019 through its EV arm, before lifting its stake later that year.
The deal was part of an acquisition spree by Evergrande founder Xu Jiayin (許家印) as he embarked on an ambitious push to overtake Elon Musk’s Tesla Inc. as the world’s biggest EV maker — a goal that is looking increasingly unreachable as he struggles to rescue his debt-laden empire.
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