(Reuters) -China Evergrande New Energy Vehicle Group reported a combined net loss of 71.12 billion yuan ($9.95 billion) for 2021 and 2022 as it posted its long overdue financial results on Wednesday.
The NEV company, which has been under pressure since its parent China Evergrande group got sucked into a debt crisis in mid-2021, had warned in March it might have to wind up operations unless it obtained new funding.
In 2022, the firm had to delay mass production of its first flagship model, Hengchi 5. The firm said in June it that as of May, it had delivered more than 1,000 units of the EV, whose sales started in October last year.
“In the future, the Group will make every effort to ensure the continuous and stable production and delivery of Hengchi 5, and launch other competitive new models one after another in line with market demand,” the company said.
“The new energy automobile industry is developing positively.”
More than 100 auto brands are struggling with weakening demand and a bruising price war in the world’s largest auto market, leading to production cuts and layoffs at some established automakers while losses for new players have piled up.
Only 25 to 30 of the 167 NEV brands in China could survive by 2030, according to consulting firm AlixPartners. An EV brand has to sell at least 400,000 units of cars annually to achieve profitability, it added.
Evergrande NEV’s net loss was 56.27 billion yuan for 2021 and net loss from continuing operations was 14.85 billion yuan for 2022, compared with a net loss of 7.4 billion yuan in 2020 when its business was predominately health management.
The firm, which changed its name from Evergrande Health in August 2020 to reflect the shift in its business, posted revenue of 2.53 billion yuan for 2021 and revenue from continuing operations of 134.0 million yuan for 2022, compared with 15.5 billion yuan in 2020.
Evergrande Group Chairmen Hui Ka Yan had vowed in late 2021 – at the start of the group’s liquidity crisis – to shift its primary business from real estate to the automobile venture within 10 years.
With $330 billion in total liabilities, the group is the world’s most indebted property developer and it defaulted in late 2021, rocking the whole China real estate sector.
The group reported last Monday a combined loss of $81 billion in 2021 and 2022 with diminishing cash, raising questions about the viability of its restructuring plan and operations.
In the offshore debt restructuring plan announced in March, Evergrande Group gave creditors a basket of options to swap their debt into new bonds and equity-linked instruments backed by the group and its two Hong Kong-listed companies, Evergrande NEV and Evergrande Property Services Group.
($1 = 7.1507 Chinese yuan renminbi)
(Reporting by Upasana Singh in Bengaluru and Clare Jim; Editing by Vinay Dwivedi)
