China Evergrande New Energy Vehicle Group stated Thursday that it might have to stop production of electric cars if it cannot obtain new funding. It had delivered more than 900 units its flagship Hengchi 5 model.
China Evergrande Group's EV manufacturing unit said that it is aiming to reduce costs by reducing staff and improving management efficiency.
It stated that the Group was at risk of ceasing production due to inability to acquire additional liquidity.
The company stated that it would launch several flagship models and hope to reach mass production if it could get financing of more than 29 million yuan ($4.2B) in the future.
According to this plan, the cumulative unleveraged cashflow from 2023 to 2020 was estimated to be negative 7 billion to negative 5 billion yuan.
This news comes as China Evergrande Group (the parent of the company) announced Wednesday plans to restructure its $22.7 billion offshore debt. This could provide a model for other distressed competitors in the country’s property sector.
The unit had previously stated that it would begin mass production of its second EV model during the first half 2023, and a third during the second half of this year.
It also stated that it intended to produce 1,000,000 vehicles per year by 2025.
The unit announced in December that it would be laying off employees and cutting salaries as part of its cost-reduction efforts.
Evergrande's transformation plans are keyed by the EV unit. Once China's most-sold property developer, it is now in the middle of a deepening credit crisis.
Since April 2022, shares in the unit were suspended.