M&A

Ever electric Evergrande

After Faraday, property giant gets new EV partner

NEVS-w

NEVS: a grand car for Evergrande

Soon after resolving its conflicts with Faraday Future, a Los Angeles-based start-up (see WiC428), China’s leading real estate developer Evergrande took almost no time to find another partner to bolster its ambitions in electric cars.

On January 15 its Hong Kong-listed unit Evergrande Health announced that it would pay $930 million for a 51% stake in National Electric Vehicle Sweden (NEVS), which was formed in 2012 to acquire the core assets and intellectual property rights of the then-insolvent but erstwhile iconic Saab Automobile. NEVS owns the IP for two pure EV models that have reached production readiness, as well as two manufacturing facilities. One is based in Sweden’s Trollhättan and the other in the Chinese municipality of Tianjin. A third will be added in Shanghai soon.

Yet neither of these were considered NEVS’s most valuable asset. “Saab itself does not have a strong technological edge, save for having some inherited advantage from General Motors [Saab’s previous owner]. Neither does NEVS stand out in the global EV market from a technological sense. What Evergrande is actually seeking is licences held by NEVS and the complementary resources,” Cui Dongshu, secretary-general of the China Passenger Car Association, told China Business News.

According to Evergrande, NEVS is one of the few new-energy automobile companies ‘qualified’ by Chinese regulators. So far there are only 11 EV makers that have reached this official standard, as the central government is looking to weed out inferior players in the crowded sector.

A lot of the nascent EV manufacturers have responded to the regulations by entrusting their production to ‘qualified’ contractors. NIO, for instance, has hired state-backed Jianghuai Automobile Group, or JAC, as its production partner. Xiaopeng Motors, also known as Xpeng, has tapped Zhengzhou-based Haima Automobile. Tencent-backed Byton took the acquisition route – like Evergrande – and bought Tianjin FAW Huali Motor.

“Evergrande might make its own-brand vehicles with NEVS, but the production lines, once they are up and running, could also craft cars for the dozens of start-ups that don’t have the facilities,” Reuters Breakingviews noted.

Another asset that comes with the deal is the connection NEVS has with Sweden. The Nordic country may only account for 3.4% of global EV market share – in terms of consumer demand – but it is a big source of high-grade graphite, which like lithium and cobalt is a key component of EV batteries.

NEVS chief executive Kai Johan Jiang is a Chinese businessman with Swedish citizenship, while chairman Karl-Erling Trogen is the former head of Volvo’s truck division. Last March the company received $500 million from GSR Capital (see WiC396 for more about this pioneering Chinese fund) to build a production base for EV batteries in Trollhättan.

Evergrande’s investment in the auto industry has now passed $4 billion, and includes the $2.1 billion it paid for a minority stake in Xinjiang-based Guanghui Group, which controls China’s largest car dealer China Grand Automotive and the world’s largest BMW dealer, Grand Baoxin Auto.

 

 

Keeping track, Jan 28, 2019: In less than nine days, Evergrande made another purchase in the EV sector, which signalled its focus is leaning towards battery making than car sales. Its Hong Kong-listed subsidiary will acquire a 58.07% stake in Shanghai Cenat New Energy for Rmb1.06 billion. Established in 2010, Cenat was a joint-venture between state-owned China Automotive Technology and Research Center and ENAX, a Japanese lithium ion battery manufacture and distributor. With four production bases in China – Shanghai, Jiangxi, Guangxi and Jiangsu – the company was among the top 10 battery makers in China by installed capacity. Separately, a company called Evergrande Smart Charging Technology was registered on January 2. With a registered capital of Rmb100 million, the startup will focus on developing charging pile for new-energy vehicles as well as charging infrastructures technology.


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