By LIU Jiaxin

Evergrande New Energy Auto, the car-making arm of troubled property developer Evergrande Group, is suspending production of the Hengchi 5 due to insufficient funds. The company expects production to resume in May.

Evergrande Auto plans to sell all of its real estate assets – 47 properties, most of which are residential projects camouflaged as care-home developments – to the parent company for a symbolic 2 yuan.

Evergrande Auto was once the group’s healthcare subsidiary. The group started a series of unexpected mergers in 2018 to pave the way for making cars.

The property developer boasted that Hengchis would have "cockpits" like spaceships and would use a smart OS integrated into drivers' homes. Vehicles were said to be able to withstand extreme heat and cold. The company’s name was changed in 2020.

At the beginning of 2021, Evergrande Auto's valuation surged to US$87 billion (602.17 billion yuan), higher than Ford and General Motors.

When the dust settles

After the sale, Evergrande Auto will have only two properties left, one in Tianjin, where its only functioning factory is located, and the other in Southwest China’s Nanning. The Tianjin property will be taken over by the parent company in June, while the Guanxi site is looking for a buyer.

Evergrande Group will also be taking over the 24.8-billion-yuan debt Evergrande Auto has amassed in its time as a healthcare provider and automotive force.

Drop in the ocean

Trading in shares of Evergrande Auto on HKEX has been suspended since April last year. The company is yet to release its 2021 annual report. According to a previous financial report, Evergrande made 6.9 billion yuan in the first six months of 2021 through property development, automaking only brought 37 million yuan.

Hengchi 5 is the only one of the six EV models, ranging from sedans to minivans to SUVs, that has made it to the assembly line. Less than 1,000 cars have found their way to customers.

Business media outlet Caixin reported that sales in the first three months of this year amounted to 296, 160 and 100 units. There is only one Hengchi showroom left in Beijing.

Supermarket sweep

In November 2019, XU Jiayin, chairman of Evergrande Group, said since the company had no experience in the automobile industry, he planned to simply buy all the technology that any automaker would need to make a car, a statement that shocked the industry.

At the time, Evergrande said it would develop 10 EVs simultaneously and reach sales of a million by 2025.