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China Evergrande Fiasco Worsens, With Arrest of EV Unit Exec

News that police have detained the vice-chairman of China Evergrande New Energy Vehicle sent shares of the unit and its embattled parent company sliding again on Monday

China Evergrande New Energy Vehicle factory in Tianjin
China Evergrande New Energy Vehicle's factory in Tianjin, China. Photo: Reuters


Shares of China Evergrande and its New Energy Vehicle unit plunged on Monday after the company said the vice-chair of its EV unit had been detained and faces a criminal investigation.

The news about Liu Yongzhuo is another setback after a share sale plan was scrapped. Shares of the group were down 1.8% at the close, while the EV unit’s stock tumbled 23% before it pared back to a 6% loss.

The arrest could hurt China Evergrande Group – the world’s most indebted property developer – as its offshore debt restructuring proposals comprise swapping part of its debt for equity in the EV arm. The parent company has more than $300 billion in total liabilities, including $23 billion in offshore debt.


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Evergrande NEV said Liu has been detained on suspicion of “illegal crimes” but did not elaborate further.

Hui Ka Yan, chairman and founder of parent Evergrande Group, has also been under investigation for suspected crimes, according to a filing in late September.

The automaker’s shares, which were suspended from trade in the morning session pending the statement, fell as much as 23% in the early afternoon but clawed back losses to be 6% down at the close of trading in Hong Kong.

That slide comes on top of a 19% plunge last week after its plans to sell new shares worth nearly $500 million to US-listed NWTN were abandoned. It now has a market value of just HK$4.2 billion ($540 million).

The EV maker has been financially stressed since its parent company became mired in its debt crisis around mid-2021, and it has repeatedly warned that it might have to wind up operations unless it obtains new funding.

It reported a net loss of 6.9 billion yuan ($964 million) in the first half of 2023, following a combined net loss for 2021 and 2022 of nearly $10 billion.

At one point, Evergrande NEV had lofty ambitions of making a million vehicles a year by 2025. But it sold just over 760 units of the Hengchi 5, its only EV model on the market, in the first half of last year.


  • Reuters with additional editing by Jim Pollard




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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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