Zhizhi Auto / Zhengqi
In the past few years, many companies have built cars, among which Evergrande Group, which started with real estate, is particularly eye-catching. However, Evergrande Automobile recently issued an announcement saying that its life-saving money may not be available.
1. Newton Group gave up investment, who will save Evergrande Automobile
Evergrande, whose real estate has been unfinished one after another, may also repeat the same mistakes in cars this time. On the evening of April 5, Evergrande Automobile announced that the strategic investment agreement signed with Newton Group was terminated. The $500 million strategic investment failed to be a lifesaver for Evergrande.
In fact, it is not unreasonable for Newton Group not to save Evergrande Automobile. In 2023, Evergrande Automobile's net loss will be as high as 11.995 billion yuan, while judging from the 2023 financial report, Evergrande Automobile's debt scale will be 180.558 billion yuan, with a cumulative loss of 110.841 billion yuan.
Not to mention $500 million in such liabilities and losses, even $5 billion is a drop in the bucket. It is not so much that the $500 million of Evergrande Automobile is a boiled duck flying, but that Newton Group left this fire pit ahead of schedule in order to avoid being cooked.
And this Newton Group is not a simple "Middle Eastern tyrant".
2. The UAE tyrant is actually Chinese capital, so he can avoid losses and get out in time
Newton Group, formerly known as Iconic, was founded in Tianjin in 2014. Although this company obtained the qualification to build a car as early as 2019, it has not announced the construction of a car for a long time.
In 2022, the new Chinese force changed its name from "Iconic" to "Newton Group", and its headquarters also moved from China to the United Arab Emirates. In the same year, the Newton Group was also listed on the NASDAQ, becoming the "first new energy vehicle listed stock in the United Arab Emirates".
Newton Group understands that car manufacturing costs are huge and risks are huge. Therefore, it is cautious in investment, and from 2020 to 2022, Newton Group has never started to build cars with zero revenue.
As a Chinese, the actual controller of Newton Group may know better about Xu Jiayin's gameplay, which has a greater risk in this era.
3. Evergrande's car manufacturing cost is too large, and brutal expansion has become a thing of the past
As the helmsman of Evergrande Automobile, Xu Jiayin has transferred his experience in real estate to the automotive sector. Xu Jiayin's proclaimed: "Buy, buy, buy, merge, merge, big, circle, circle, good!" The five-character scripture of Xu Jiayin highlights his extensive business model of brutal expansion.
Xu Jiayin started in the real estate industry by using huge loans to create high-end products, and then attract investment, constantly snowballing and rolling debts, forming a scale effect. In this way, Evergrande Group, which has a peak market value of 100 billion, has been created.
However, this set of snowball logic can work in the era of financial liberalization, but it is difficult to move an inch in the current era of monetary tightening. Although Evergrande Automobile has launched a number of Hengchi models, the cost is completely out of control in the process of operation, and the hundreds of billions of debts are not only unanswered, but also scare away a group of investors.
Xu Jiayin may not have understood the difference between the automotive industry and the real estate industry, which has complex parts and extremely high cost control requirements. The extensive management model of real estate is obviously not suitable for the automotive industry, but Xu Jiayin still sticks to his "brutal expansion" logic. And this arrogance eventually buried the future of Evergrande Automobile.
In fact, the era of disorderly expansion of capital has passed, and exquisite cost control has become a compulsory course for many car companies. In 2023, Xpeng Motors invited Wang Fengying from Great Wall Motors, which is to let this experienced manager "treat" the crux of the huge production cost.
However, looking at the development process of Evergrande Automobile, it seems that their management is in a state of "terminally ill" and unaware, neither taking the initiative to govern nor inviting "famous doctors". Instead, he is looking forward to external "tonics" to treat his weak body.
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