Evergrande lays cards on EV table

In a bid to raise further capital to fund its aggressive foray into the electric vehicle (EV) market, the Hong-Kong listed Chinese EV automaker Evergrande New Energy Vehicle Group (NEV) yesterday announced that, pending regulatory approval, it is now looking to sell yuan-denominated shares through Shanghai’s new STAR exchange. The announcement  of the secondary listing follows reports that it has been negotiating with outside investors –  including Tencent Holdings and Jack Ma’s private equity firm Yunfeng Capital  – to raise more than $500m through a private stock placement.
An offshoot of the Evergrande Group, China’s second-largest property developer and among the world’s most valuable real-estate company, Evergrande NEV was officially launched earlier this month with the renaming of Evergrande Health, but the name change was largely cosmetic. By then, it had long made clear its ambitions to become a ‘global powerhouse’ in the new EV market through the execution of a series of acquisitions and strategic partnerships with up to 60 of the world’s leading auto parts suppliers. These have created a supply chain ranging from the production of power batteries, motor powertrains and vehicle manufacturing to auto sales and smart charging.
Evergrande Chairman Xu JiayinThe group’s chairman Xu Jiayin has tasked the new subsidiary with reaching sales of five million units within the next 10 to 15 years. “Evergrande had nothing to make cars with,” he told the Evergrande New Energy Vehicle summit in November 2019, “but we’ve bought all the technology and companies that we can lay our hands on.” So far, the group is estimated to have spent nearly $3bn on the new venture.
This August, it unveiled its Hengchi range of six EVs, starting with the all-electric ultra-luxury D-segment sedan Hengchi 1 that is scheduled to go into mass production sometime next year. Designed by former BMW and MINI veteran Anders Warming, this will be followed by the luxury B-segment sedan Hengchi 2 and the SUV Hengchi 3. Subsequent models in the pipeline include an all-electric seven-seater luxury MPV and a battery-powered A-segment crossover SUV.
If a new report from Bloomberg NEF is to be believed, then Evergrande and Xiu are in the right place at the right time. According to  Electric Vehicle Output 2020, global EV sales are set to rise from 1.7 million today to 8.5m by 2025, to 26m by 2030 and to 54m by 2040. Although China’s share of sales is forecast to reduce from 54% to 33% during the final 15 years, unit sales cast would nevertheless grow almost fourfold over the same period.
China currently also has a stronghold on the lithium-ion battery supply chain. Along with 72GWh of electricity storage demand, China enjoys an estimated 80% share of the world’s raw material refining, 77% of cell capacity and 60% of component manufacturing. This dominance has not been lost on Elon Musk, and was a driving force behind Tesla’s decision to locate a 210-acre ‘Gigafactory’ in Shanghai.