SHANGHAI (March 19): A Chinese developer known for its investments in everything from soccer clubs to spring-water companies is taking on Elon Musk in the electric vehicle arena, declaring it can be the biggest manufacturer in the world within three to five years.
China Evergrande Group, the nation’s second-largest property developer, has been moving further away from its real estate roots for years, but this may be its boldest departure yet. The firm said in a statement on its website Tuesday that it plans to start selling EVs “soon.”
“Evergrande has positioned across the electric-vehicle industry chain and is now armed with advanced technology,” Chairman Hui Ka Yan was cited by the company as telling a supply-chain conference held by the group in Tianjin on Saturday. “Evergrande will strive to become the world’s biggest, and the strongest, electric vehicle group within three to five years.”
Musk, the chief executive officer of Tesla Inc., has been churning out EVs for years and has only recently been able to make a profit. Besides Tesla, Evergrande will come up against all the world’s major car makers, which are plowing tens of billions of dollars into EV production and research.
Tesla’s latest Model Y crossover, unveiled earlier this month, has rekindled concerns about the company’s cash position and analysts are skeptical of executives’ claims they can service debt obligations. Nissan Motor Co., meanwhile, unveiled a new version of its Leaf plug-in electric car in January, while Daimler AG in December announced plans to buy US$23 billion worth of battery cells by 2030 to bring electric and hybrid vehicles to market.
Evergrande will feel the pressure too from local players, like BYD Co., which is backed by Warren Buffett and which has been a big beneficiary of electric-car subsidies from Beijing. (Those handouts are expected to be heavily cut in 2019, however.)
“Aiming to produce at such speed is like imagination,” said John Zeng, the managing director of LMC Automotive Shanghai. “I haven’t seen very strong technology or products from the firms they’ve bought.”
Evergrande didn’t disclose any details of the cars it aims to manufacture by June, or whether those vehicles would be for mass production or just samples. It takes at least two years to produce a new electric vehicle model from scratch, Zeng said.
Still, it’s not the first time the property developer has dabbled in automotive technology. This year alone units associated with Evergrande’s health division have spent more than $1.1 billion buying stakes in an array of EV-related companies, including an interest in a maker of in-wheel motors, a stake in a battery maker, and part of a Swedish firm focused on intelligent cars.
Evergrande Health Industry Group Ltd also last year pledged US$2 billion to EV startup Faraday Future, the firm founded by Chinese ex-billionaire Jia Yueting that’s been expanding in the U.S. After a legal fight over whether Jia could take on new investors, Evergrande Health agreed to a reduced stake. The interest does at least give Evergrande a production base for its own cars.
Hui, who is China’s third-richest person, also said over the weekend that Evergrande believes the EV industry has “enormous market potential” and that the company aims to make a contribution toward China’s goal of becoming a “powerful economy in automobile.”
Evergrande in August pledged to invest 100 billion yuan (US$15 billion) over the next decade to establish research bases with the Chinese Academy of Sciences. The six projects will span everything from AI to drone development.
The firm also said Tuesday that Harvard University President Lawrence S. Bacow visited the company’s Hong Kong headquarters on Monday. Evergrande and Harvard University discussed future cooperation on the R&D of new energy car batteries, electric motors and AI for Evergrande’s EV business, Evergrande said in a separate statement.
Evergrande’s Hong Kong-listed stock closed up 5.3%, its biggest one-day jump since November, at HK$28.60, its highest level since August.