Guangzhou-based XPeng shows its G3 model at the Shanghai auto show in April. [Photo by Li Fusheng/China Daily]
Chinese property development company will invest 45 billion yuan in auto sector by 2021
Chinese property developer Evergrande has rolled out grand - if not grandiose - plans for electric vehicles at a time when established carmakers in the country are seeing sales slumps and startups are jostling for attention of investors.
The company will invest a total of 45 billion yuan ($6.4 billion) by 2021 in electric vehicles, said its chairman Xu Jiayin, also known as Hui Ka-yan, on Tuesday at a conference in Guangzhou, Guangdong province.
The goal is to become the world's largest new energy car maker in three to five years, with the annual sales reaching 1 million units in five to 10 years. For the five years after the first 1 million units, the company said it hopes to produce 5 million units annually.
"For core technology and companies available to be purchased, we'll buy them all," Xu told some 1,100 representatives from more than 200 potential partners at the conference.
"For those we couldn't buy, we'd like to join hands with them through cooperation," he said.
Evergrande has gone on a shopping spree, acquiring the controlling stake in National Electric Vehicle Sweden for $930 million, investing more than $300 million in a new venture with supercar maker Koenigsegg, and paying $154.4 million for a 58 percent stake in lithium-ion battery maker Shanghai Center at New Energy.
The company had already invested 16 billion yuan in electric cars by June this year, officials said during the interim financial results briefing in August.
Xu said the Hengchi 1, the first car developed by the company, will make its debut in the first half of next year. It will go into mass production in 2021.
It currently has eight plants in use or under construction in Tianjin, Shanghai, Shenyang, Guangzhou as well as one in Sweden.
He added that Evergrande is now developing 15 models, ranging from midlevel to ultraluxury cars, and the number of plants will reach 10 in China and other countries involved the Belt and Road Initiative to expand production and lower costs.
Analysts are not as confident as Xu about the company's plans.
Cui Dongshu, secretary-general of the China Passenger Car Association, said without a systematic approach, Evergrande will have a difficult time realizing breakthroughs in technology and producing competitive cars.
The cooling market also works against Evergrande.
Sales of electric cars and plug-in hybrids in China fell 46 percent in October to 75,000 units compared to September, according to the China Association of Automobile Manufacturers.
It was the fourth consecutive month of slowing sales after the Chinese government cut subsidies on purchases of electric vehicles in late June and the 16th month of sales fall in country's overall car market.
BYD, the world's biggest maker of new energy vehicles, reported an 89 percent slump in third-quarter earnings and warned profit could fall as much as 43 percent this year.
BJEV, the largest maker of electric cars in the world, also forecast a 2019 loss in a grim earnings update.
Startups are facing an even more serious situation, jostling for attention in an almost overcrowded sector and trying to produce convincing arguments about future profitability.
They raised just $783 million from January to mid-June 2019, compared with $6 billion for the same period last year, according to Reuters, citing data from Pitch-Book. For 2018, the total funds raised stood at $7.7 billion.
Nio, once hailed as Tesla of China, failed last month in its attempt to get local government funding. In the first 10 months this year, the startup that has burned through more than $5 billion in four years delivered less than 15,000 vehicles.
By the end of the third quarter, Nio had cut its workforce to 7,800 from 9,900 employees in January, and its shares have dropped more than 70 percent this year, according to Bloomberg.
Reuters said XPeng is mulling going public in the coming years, with New York among one of possible listing venues, to raise money.
The proceeds will be mainly used for research and development of autonomous driving-related software, mass production of its G3 sport-utility vehicle model and P7 sedan, branding and expanding its retail network, said Reuters, citing people with knowledge of the matter.
XPeng, backed by Alibaba, said on Wednesday it has raised $400 million from investors including Xiaomi Corp, to fund its growth. The Guangzhou-based startup sold more than 13,000 vehicles in the first nine months this year, which accounted for 1.4 percent of total new energy cars sold in China.