Evergrande eyes transition toward NEVs as part of self-rescue effort
Published: Oct 23, 2021 12:13 AM
Evergrande Group Photo: CFP

Evergrande Group Photo: CFP

Evergrande is eyeing a transition from property toward new-energy vehicles (NEVs) within 10 years as part of the indebted developer’s self-rescue efforts, the Securities Times reported Friday. 

The strategic shift was among three decisions announced by Evergrande founder Xu Jiayin to defuse risks at the property giant. The other two decisions were for an all-out push to resume work and production to ensure the completion of properties, and plans to fully implement property sales while substantially downsizing its real estate development and construction, according to the report.  

The importance of delivering completed buildings currently sits atop Evergrande’s agenda, Xu said, stressing that so long as work and production resume, and sales and operations are back on track, the property giant can make good on its deliveries of buildings to property owners and pay what it owes to upstream and downstream partners. 

The redemption of its wealth management products can also help Evergrande to gradually repay its borrowings from financial institutions, Xu continued.

The major risks for Evergrande are that it might default on debts as they fall due, the shutdown of some of its construction sites, and uncertainty over the delivery of presold homes, Yi Gang, governor of the People's Bank of China (PBC), the country's central bank, said at the Group of 30 virtual seminar on Sunday, in response to a question about whether the country may deem it necessary to take measures to avoid systemic risks as the Evergrande issue deepens.

Evergrande owes about $300 billion, with one-third of that falling under financial liabilities. But this, along with the diverse creditors and collateral Evergrande has offered for its debts, suggests that the spillover of the Evergrande incident on the financial sector is controllable, according to Yi.