A Chinese real estate and health conglomerate is the latest entrant into China’s crowded electric vehicle market. And it’s pouring billions to take on the major players in the Chinese new energy vehicle or NEV market.

Last month, the China-based Evergrande Group owned by billionaire Hui Ka-yan released an electric vehicle named the Neva 93 developed by its health subsidiary. Evergrande Group is the third-largest real estate developer in China but operates a vast array of businesses, including in the health sector.

During the launch ceremony of the new vehicle, representatives of the Chinese group said that they wanted the company to be the largest new energy vehicle maker in the world, rivaling the likes of American electric vehicle maker Tesla and Chinese EV firm BYD, in the coming years. New energy vehicles include electric cars, plug-in hybrids, and hydrogen-powered vehicles.

Chinese billionaire Hui Ka-yan, who owns Evergrande, has poured $42 billion into new energy vehicles over the past six months, reports the South China Morning Post. These include investments in Swedish automaker National Electric Vehicle Sweden (NEVS), luxury car brand Koenigsegg, three production factories in Guangzhou city of China, and the acquisition of battery technology firm Shanghai Cenat New Energy (SCNE).

Hui is betting big on new energy vehicles in a time of slow growth in the industry, both domestically and globally. After registering a 61.7 percent increase in the sale of NEVs between 2017 and 2018, China is expected to witness a slower growth rate of less than 20 percent by the end of 2019.  In the United States, Tesla is facing slowing demand despite record deliveries in the past quarter.


Here’s What We Know so Far About Hui and His Investments in NEVs

Hui has spent a lot of money into the NEV industry, from car production to research and development, in his bid to mass-produce new energy vehicles. In January, Evergrande Health invested $930 million in NEVS, becoming the largest shareholder in the Swedish company. The same month, another $154 million were dolled out for a stake in EV battery maker SCNE.

Two months later, the Evergrande Group paid $72 million for shares in the Netherlands-based motor-maker e-Traction, In May, an undisclosed amount was invested in a British company also developing vehicle motors. The company also invested close to $2 billion in a new EV company in Guangzhou.

However, by far the largest investment was in China, where Hui spent close to $40 billion buying three factories for NEV production. According to a report in the Chinese state-run Global Times, one factory will have the capacity to produce 1 million NEVs annually. The other two facilities will produce batteries, motors, and other electronics for the vehicles.

Evergrande’s primary business is real estate. And its decision to pivot to electric vehicles has come in the wake of a slump in the Chinese real estate market. Reuters reports that Hui’s venture into automobiles is propelled by fears that Beijing could take measures to keep real estate prices in check and the opportunity in the market stemming from government subsidies for NEVs.

Hui wants Evergrande to vertically integrate the components of NEV production, much like what Tesla seeks to do in the United States. The money poured into buying up relevant companies helps Evergrande in coming close to achieving that goal. However, since the company is new to the auto sector, it faces numerous challenges.

Evergrande Is Betting Big on NEVs, But Can It Succeed?

The Chinese government has set out a plan to phase out NEV subsidies in the coming months. According to a report in the Hong Kong-based news publication South China Morning Post, local and central governments in the country have already scrapped 60 percent of subsidies on NEVs. Despite price cuts by NEV makers, Beijing’s decision will likely impact sales.

Evergrande will also face tough competition from international car companies. California-based EV maker Tesla is building its Gigafactory 3 near Shanghai and plans to make EVs there to cut down the cost of vehicles for the Chinese market. However, Chinese concerns related to the build quality of Tesla vehicles could provide Evergrande a small opening.

Hui has been under financial pressure too. According to a report in Reuters, the Evergrande Group is facing cash flow problems because of increasing debt. Although Tesla is going through a similarly difficult phase, it is worth noting that it already delivers more than 245,00 cars per year. Hui’s firm, on the other hand, has yet to sell a vehicle.

As Beijing encourages environmentally sustainable solutions, the entry of a major player like Evergrande in the new electric vehicle market will certainly change the dynamics of the business. The pace at which Hui is moving ahead with his plans to become the leading NEV maker in the world also eerily resembles the EV ambitions of Tesla chief Elon Musk.

Usman Kabir covered science, space, and technology for Globely News. As a kid, he would make models of the solar system and take part in water rocket competitions. His childhood obsession has led him to a degree in Space Science. Usman likes to spend his free time watching reruns of "Curb Your Enthusiasm" and "Seinfeld."


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