A new car-making power company that has yet to mass-produce has suddenly topped the market capitalisation rankings of China’s entire vehicle companies.
August 4, Evergrande Motor (00708. HK, formerly Evergrande Health, surged as high as HK$37.70 at one point, but although it closed down to HK$34.80, it still has a total market capitalisation of HK$30,672 million (RMB27,695 million) It surpassed BYD’s (002594.SZ) of 225.818 billion yuan and SAIC Group’s (600104.SH) of 214.976 billion yuan, making it the first Chinese vehicle company to do so.
In less than two months, Evergrande’s shares rose more than 452 per cent in less than two months, up from HK$6.30 a share on June 10.
Wu Hui, general manager of research department of YV Economic Research Institute, told First Financial News that Evergrande automobile has not yet been mass produced, there are many possibilities in the future, he is not in a position to comment on this.
Since the beginning of the year, the capital market, led by Tesla, has become increasingly enthusiastic about investing in electric vehicles. It closed at $1,485.00 and had a market capitalisation of $276.7bn as of August 3rd (EST), ranking it among the world’s most valuable car companies.
Chinese auto makers are targeting Tesla, including U.S.-listed U.S.-listed U.S.-listed U.S. autos and ideal cars, all of which are catching up with Tesla. Evergrande is one of them, and while it hasn’t yet achieved mass production, it doesn’t hide its ambitions at all.
On July 27 this year, Evergrande Health announced that its company name had been changed from Evergrande Health to Evergrande Automobile, marking the transformation of Evergrande Health’s main business into a new energy vehicle and accelerating its layout in the automotive sector. Just a week after the name change, Evergrande has made another big move.
On August 3, Evergrande Motor’s Hengchi brand released six new cars in one breath, including pure electric ultra-luxury D-Class sedan Hengchi 1, pure electric sports luxury B-Class sedan Hengchi 2, pure electric luxury C-class large SUV Hengchi 3, pure electric 7-seat luxury MPV Hengchi 4, pure electric A-class SUV Hengchi 5 and pure electric A-class cross-border SUV Hengchi 6. 6 new cars cover cars, SUVs, MPV, crossover vehicles and other products.
As a platform for Evergrande Group to develop the new energy vehicle industry, Evergrande Automobile is currently simultaneously developing 14 new energy models, covering the top-of-the-line, ultra-luxury, luxury, exclusive, comfortable, classic and other products, the product line is more abundant than Tesla, its plan in 3 to 5 years to surpass Tesla, become the world’s largest new energy vehicle manufacturers.
In 2018, Evergrande Motor embarked on the road to building a car by acquiring a 100% stake in Hong Kong’s Timeying Corporation for HK$6,746 million, indirectly acquiring a 45% stake in FF Hong Kong and FF USA. Although the acquisition lost, but the Vietnam War more brave, followed by the acquisition of Guanghui Group for the follow-up product sales paving the way, the acquisition of new energy vehicle NEVS 51% of the equity to obtain production qualifications and related technology, the acquisition of Tate Electrical and Mechanical 70% of the shares to obtain the core technology of the motor, the stake in the super-run brand Koenig to obtain the relevant design.
At present, Evergrande Automotive has built a whole industry chain covering power batteries, powertrans, vehicle manufacturing, automobile sales and smart charging in related industries. Evergrande announced its investment and mass production plan last year, with a total investment of 45 billion yuan from 2019 to 2021, and Hengchi’s first car, Hengchi 1, will be mass-produced in 2021.
In addition to China, Evergrande Motor will also build ten vehicle production bases around the world, and support the core technology parts production base, and the vehicle base plans to produce more than 1 million vehicles per year in 2 to 3 years, to 10 to 15 years, the annual production scale of more than 5 million vehicles. At present, Evergrande Automotive has signed strategic cooperation agreements with the world’s top 60 automotive parts leaders, including Bosch, Magna and ZF.
Accept market challenges.
The ideal is very plump, but the reality of the new energy vehicle market is a bit bone-chilling.
At present, China’s new energy vehicle market is still not out of the cold winter. In June, China’s sales of new energy vehicles fell 33.1% year-on-year to 104,000 units, while the cumulative sales of new energy vehicles in the first half of this year reached 393,000 units, down 37.4% year-on-year, according to the China Automobile Association.
However, the current situation in the new energy vehicle market has improved, the decline gradually narrowed and is expected to stop falling in the second half of the year. Some new car-building companies in July this year have won good results. The company sold 3,522 vehicles in July, up 322.1% year-on-year, a one-month high, and delivered 17,702 vehicles from January to July this year, a total of 49,615 since mass production began in 2018. Xiaopeng P7, a new car owned by Xiaopeng Automobile, achieved a monthly delivery of 1,641 vehicles in July this year, making it the fastest-growing model to be delivered on a new scale.
Wu Hui pointed out that Wei li, Xiaopeng and other new forces of these car-making enterprises have the ability to mass produce, and monthly sales have rushed to 1000 vehicles, there is hope that in the future in the automotive industry to occupy a place. However, China’s new car-making forces are not yet profitable, still need to be developed through external financing, their own lack of blood-making function, so it can not be said that it has passed through the dark times, only like Tesla can be said to be profitable.
Tesla, founded in 2003, lost $860 million in net profit in 2019. However, Tesla, which has been profitable since the third quarter of last year, made a net profit of $104 million in the second quarter of this year, making a profit for four consecutive quarters. Last year, Tesla delivered about 367,500 electric cars worldwide, and this year’s global sales target is 500,000.
The chief analyst of a securities company told first financial reporters that the scale of sales to get up, new energy vehicle enterprises basically have to reach annual sales of more than 300,000 vehicles in order to show economies of scale, or leave the government subsidies are still losing money.
Unlike many new car-making power companies worried about making money, Evergrande Motor has the full support of Evergrande Group, which focuses on real estate. Evergrande Group insiders in an interview with first financial reporters have said that the group’s annual net profit of tens of billions of yuan, enough funds to support the construction project.
However, how to pry the new energy vehicle market and overtake Tesla is considered a challenge for Evergrande after mass production next year.
According to Wu Hui’s estimate, China’s annual sales of new energy vehicles this year are about 1.1 million units, may not exceed 1.2 million units, next year the new energy vehicle market is expected to achieve positive growth.
At present, Tesla is on the rise, traditional car companies have also accelerated the layout of electric vehicles in China, new energy vehicle market competition intensified, the new force of the head of the car-building enterprises after five or six years of efforts, the current monthly sales are only a thousand vehicles level. Evergrande will have a very difficult time challenging the annual sales volume of 1 million vehicles in just a few years.