Evergrande woes spread to Sweden
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China Evergrande Group's financial woes have spilled over to Sweden, with a unit of the company's electric-vehicle 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 chief executive officer of National Electric Vehicle Sweden, 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 $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 has recently 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 Ford before a precipitous decline that has wiped out almost $83 billion in market cap.
NEVS, as the Swedish unit is known, in August gave notice to almost half its 670 workers at the former Saab factory in Trollhattan. There's "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. "We still have money in the company. 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 already-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.
With a license to manufacture cars in China, and a factory in Tianjin, Tilk is now resting his hopes on NEVS being able to play a key role in Evergrande's ambition to finally 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 a 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 a multi-billion-dollar acquisition spree by Evergrande founder Hui Ka Yan 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.