Evergrande shares jump following electric vehicle unit push

The Chinese real estate company’s vehicle subsidiary was launched in 2019

Exterior of Evergrande Group building                                 
China Evergrande Group will prioritise its electric-vehicle subsidiary – Photo: Shutterstock
                                

Shares in Chinese real estate company Evergrande Group leaped by around 6% on Monday morning after it was announced that the company would be focusing on growing its electric vehicle (EV) unit.

Evergrande Group is China’s second largest developer and has amassed debts and liabilities of around $300bn. The company, which has expanded aggressively over the past few years, has faced recent scrutiny around the future of its business amid its on-going debt crisis and uncertainty over the suspension of its real estate projects.

Meanwhile, shares in its electric unit, Evergrande’s New Vehicle Energy Group, rose by 17% on Monday morning.

Switching paths

Evergrande’s chairman Hui Ka Yan said on Friday that the company plans to prioritise its electric vehicles over the business’s property focus within the next decade.

Evergrande’s vehicle subsidiary was launched in 2019 in an effort to expand its real estate offering. The company pledged to deliver its first electric vehicle early next year amid difficulty around cash-flow and delayed payouts.

The developer narrowly avoided faulting on a missed payment that was due on 23 September with a 30-day grace period after paying $83.5m to a Citibank trustee account, a person familiar with the matter told Reuters. It also resumed work on several of its real estate projects.

Evergrande Group currently owns more than 1,300 projects in more than 280 cities across China.

Further reading: Evergrande shares jump 17.6% but default anxiety persists

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