Evergrande’s NEV unit plunges on China’s order to refund US$262 million in state subsidies

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The Guangzhou-based carmaker was ordered to return 1.9 billion yuan (US$261.9 million) in state subsidies, according to a statement

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The research headquarters of China Evergrande New Energy Vehicle Group in Shanghai on Sept. 24, 2021. Photo: Bloomberg

Yulu Ao

Published: 12:37pm, 12 Jun 2024Updated: 5:22pm, 12 Jun 2024

China Evergrande New Energy Vehicle Group (NEV) plunged by the most in nearly nine months, after the Chinese government ordered the unit of China Evergrande Group to return all its state subsidies, adding to the financial woes of the world’s most indebted developer.

Evergrande NEV’s shares plunged by as much as 26.7 per cent before closing down 20.9 per cent to HK$0.34 in the city’s stock market, the lowest intraday level in almost a month.

The Guangzhou-based carmaker was ordered to return 1.9 billion yuan (US$261.9 million) it had received as subsidies from various local authorities because it failed to meet its contractual obligations, according to an overnight statement to the Hong Kong stock exchange.

The company, which raised HK$2.7 billion in Hong Kong in 2021 to develop its Hengchi electric sedans, had produced only 1,700 cars at a total loss of 12 billion yuan last year. Production at its Tianjin factory had halted since the beginning of 2024, the company said.

A Hengchi electric car by China Evergrande New Energy Vehicle Group on display at the Auto Shanghai 2021 show in Shanghai on April 19, 2021. Photo: Bloomberg

The company failed to fulfil its obligation to set up a headquarters, and did not meet its production and sales goals, causing a local authority to terminate its April 2019 agreement with Evergrande NEV, according to the statement, which did not identify the authority.