Evergrande Auto will be acquired after leaving Evergrande Group

Evergrande Auto announced that 58.5% shares held by its parent company Evergrande Group and related parties will be acquired by external companies. According to the announcement, 29% of the shares will be acquired immediately, and there is an opportunity to acquire the remaining 29.5% of the shares within a certain period of time. This means that Evergrande Auto will be separated from Evergrande Group as a whole and can independently develop the electric vehicle business.

At the same time, the announcement also shows that the acquirer will also provide credit funds to Evergrande Automobile to support its continuous operation and the development of electric vehicle business. At present, Evergrande Automobile is facing serious financial problems. It has lost more than 110 billion yuan in a row, and plans to return about 1.9 billion yuan of incentives and subsidies. This had a further negative impact on its financial position.

In addition, as of December 31, 2023, Evergrande Auto has only produced 1700 Hengchi 5 vehicles and delivered more than 1389 vehicles in total. However, in the entire electric vehicle industry, such deliveries are relatively low. However, due to the business of Evergrande Group, which has been excessively dependent on the development of the real estate industry for a long time, its financial situation has been seriously affected.

By the end of 2023, the total assets of Evergrande Auto will be 34.851 billion yuan and the total liabilities will be 72.543 billion yuan. At present, its book cash and cash equivalents are only RMB 129 million.

However, it is worth noting that even in the face of these difficulties, Evergrande Automobile has made a large amount of R&D investment in the field of electric vehicles, and has made some arrangements in batteries, motors and other aspects. In addition, Tianjin Factory is an example of its perfect production base and facilities, and has independent production qualification. For other enterprises wishing to enter the new energy vehicle industry, these software and hardware facilities have certain value.

Therefore, without considering the influence of other factors, if the new investor is strong and can successfully acquire the remaining shares, it is expected to turn around in the future.

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