China Evergrande Group’s financial misery has spread to Sweden, with a unit of the company’s electric vehicle arm in talks to find new backers after cutting 300 jobs.
“I act as if it will not work with Evergrande,” said Stefan Tilk, CEO of National Electric Vehicle Sweden, in an interview. “Therefore, we have started discussions with new intended owners or project financiers.”
He refused to name them, citing confidentiality agreements.
Chinese real estate developer Evergrande is struggling to stay afloat as it competes with more than $ 300 billion in debt. The fallout has rippled through China’s economy and global financial markets, and its EV arm in Hong Kong is also facing a struggle for survival.
Evergrande New Energy Vehicle Group has recently missed out on salary payments to certain employees, fallen behind with paying suppliers and even stopped free lunches for workers at the research center. As recently as April, it was valued at more than Ford before a sharp decline that has wiped out nearly $ 83 billion in market value.
In August, NEVS, as the Swedish unit is called, announced almost half of its 670 workers at the former Saab factory in Trollhättan. There is “no major activity” in the facility, Tilk said.
“The Evergrande situation triggered the decision,” he said. “These are things I had wanted to do for a while, but now it became necessary, given that Evergrande can no longer finance us.”
Tilk said his unit still has money to pay its workers. “We still have money in the company. I can not give an exact date, but we can still manage,” he said. “We’re talking for a few months.”
Evergrande NEV last week warned of a “serious shortage of funds”, which means that it is likely to miss its already delayed goal of starting mass production next year. The closest the public has come to seeing the cars are the nine models it showed at a flash show at the Shanghai Motor Show in April.
With a license to manufacture cars in China and a factory in Tianjin, Tilk is now resting its hopes that NEVS will be able to play a key role in Evergrande’s ambition to finally get a car to market.
“If there is one asset they own outside of China that they care about, it is NEVS,” Tilk said. “We are an important piece of the puzzle for them to be able to manage their investment. The question mark is whether they have enough funds, stakeholders, if they will be able to invest further. I do not know.”
NEVS was founded in 2012 and bought Saab’s assets from bankruptcy before experiencing its own financial difficulties. It stopped production of its Saab 9-3 in 2014 before entering into a debt restructuring that lasted for almost a year.
Evergrande first invested in the company in early 2019 through its EV arm, before withdrawing its stake later that year.
The deal was part of a multibillion-dollar acquisition round by Evergrande founder Hui Ka Yan when he embarked on an ambitious effort to take over Elon Musk’s Tesla Inc. as the world’s largest EV maker – a goal that looks increasingly inaccessible as he fights for to save his debt-ridden empire.