At its peak, Evergrande Automobile was thinking about what to do if its core technology could not be purchased. What Evergrande Automobile is thinking now is what to do if the assets are worthless and cannot be sold.On November 12, 2019, at the Evergrande New Energy Vehicle Global Strategic Partner Summit, Xu Jiayin gave an unscripted speech for 26 minutes.

butWhat’s truly impressive is only 1 minute of it. In that minute, Xu Jiayin summarized Evergrande Automobile’s development strategy in five classic sentences:“Buy, buy, buy, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go, go.”

This one-minute video has been ridiculed on Bilibili for four years. Some people say that Boss Xu’s speech is the same as an elementary school composition.

Boss Xu is actually not talking nonsense. The connotation of these five sentences is very simple:Just spend money, cooperate with others if you can't buy technology, and form your own circle of friends. In the end, we will make good products and make the company bigger. For Evergrande Automobile, which lacks technology and has a lot of funds, this is a very reliable development method.

There's nothing wrong with five sentences.The only problem is that I didn't say a word, and everything was done in reverse..

Buy: Evergrande Automobile is now selling itself. Together: Evergrande Automobile owes a lot of debt, and the circle of friends has long turned into a circle of creditors. Not to mention Haoheda, Evergrande Automobile's sales are very dismal, its stock price has already hit rock bottom, and its products are also full of problems.

If we could now summarize Evergrande in five sentences, that would be:Sell ​​sell sell, divide, divide, owe, owe, owe, small, small, difference, difference, difference. It is very likely to have to be added later:Down and down. Boss Xu’s 1-minute speech video will always be the object of ridicule among the masses after dinner...

From buying to selling

The birth of Evergrande Automobile was described miserably by Xu Jiayin: "We need people but no one, technology but no technology, experience but no experience, and a manufacturing base but no manufacturing base. We are completely destitute." As for the automobile business, Evergrande really has nothing.

Except money.

At that time, Evergrande’s annual revenue was nearly 500 billion yuan, and its cash on hand exceeded 200 billion yuan. Since you are so poor that you only have money left, then buy it.

Evergrande buys everywhere just like when it first formed a football team:First, it cost 160 billion yuan to build a base in Nansha, Guangzhou. The base covers an area of ​​1.26 million square meters, which is 1.5 times the area of ​​Tesla's Shanghai factory. Subsequently, Evergrande invested another 120 billion yuan in Shenyang to build an automobile production plant. At the same time, Evergrande Automobile’s automobile manufacturing base in Tianjin and parts manufacturing bases in Shanghai and Guangzhou were also put on the agenda.

In terms of car manufacturing qualifications, Evergrande Health firstAcquisition of MiniMinor Limited for US$900 millionand its holdings51% stake in Swedish NEVS, and then spent moneyAcquired the remaining 17.6% shares of NEVS for US$379.5 million.


Picture | NEVS Swedish R&D center and production base

technical aspects, Evergrande acquired two wheel hub motor companies, Tate Electromechanical and the British Protean, and introduced a series of world-leading production equipment and processes from Germany's Siemens, Schuler, and KUKA in accordance with Industry 4.0 standards.

In terms of power batteries, the core component of electric vehicles, Evergrande spent 1.06 billion yuan to acquire 58% of the equity of Kanai New Energy, and also introduced internationally renowned battery scientist Li Junxiu, Japan's Yamaha engine battery R&D director Zhang Qing, South Korea's LG Chem Battery PACK Development Center general manager Li Guicheng and other technical talents.

As of 2020, Evergrande’s cumulative investment in new energy automobile industry47.4 billion yuan, In the first half of 2021, Evergrande Automobile’s various expenses were 4.531 billion yuan, with a total of nearly 52 billion yuan.It has already exceeded Xu Jiayin’s three-year budget of 45 billion yuan..

In hindsight, this path was correct, but the problem appeared in the wallet.

In 2020, relevant policies have drawn three red lines for real estate companies. First, the asset-liability ratio cannot exceed 70%. Second, the net debt ratio cannot exceed 100%. Third, the cash short-term debt ratio must not be less than "1." Evergrande failed in three areas, and the cash flow crisis became increasingly severe. Therefore, Xu Jiayin began to sell Evergrande properties at discounts across the country to make up for the shortfall.As a result, Evergrande Automobile changed from a rich second generation to a poor boy..

From this moment on,Evergrande Automobile's fate has been doomed because it has lost its only advantage, having more money.

On the contrary, due to the highly leveraged nature of the industry, Evergrande has no buffer zone between the rich and the "losers". Soon, Evergrande became the poorest company in the world. In Evergrande Group's 2021 semi-annual report, flexibly deployable monetary funds are 86.8 billion yuan, while short-term liabilities due within one year are as high as 240 billion yuan. Insolvency began.

thus,Xu Jiayin's first sentence changed, from "buy, buy, buy" to "sell, sell, sell."

I won’t talk about how to sell real estate and football, just look at cars. After problems such as layoffs and limited production capacity emerged, Evergrande began to place its hope on external investment. In August 2023, China Evergrande launched an overseas debt restructuring and began to introduce strategic investors to Evergrande Automobile.

At the same time, it was reported that Newton Group, a local tycoon in the Middle East, made a strategic investment of US$500 million in Evergrande Automobile and expanded its stake in Evergrande Automobile to 27.5%. However, as Xu Jiayin was investigated, Newton Group urgently sent a letter to adjust the transaction requirements.


At its peak, Evergrande Automobile was thinking about what to do if its core technology could not be purchased. What Evergrande Automobile is thinking now is what to do if the assets are worthless and cannot be sold.

Circle of friends becomes circle of creditors

According to Xu Jiayin's vision, some core technologies cannot be purchased. What to do?Make friends.

Money is the best lubricant of friendship.

When you are rich, you must have many friends.For Mr. Xu, who has a lot of money, it is not difficult to "hehehe" and "circle circle".

Evergrande Automobile has had no shortage of cooperation and friends since its birth. In terms of capital, in September 2020, Evergrande Automobile received HK$4 billion from Tencent, Didi Chuxing, Sequoia Capital, and Yunfeng Fund. In January 2021, Evergrande Automobile completed the most luxurious round of financing in history. According to the announcement issued by Evergrande Automobile, a total of subscription agreements were signed with six investors, with a total financing of 26 billion Hong Kong dollars. Investors include Chengyu Holdings, Cuilin, Hong Kong tycoon Liu Luanxiong’s wife Gambi, etc.


In terms of technology, Evergrande also has many friends. At the strategic partner summit where Evergrande said "buy, buy, buy" alone, it signed contracts with more than 60 automotive suppliers including ZF, Benteler, Delphi, Bosch, Magna, and Continental.

Since then, Evergrande Automobile has successively signed R&D and design strategic cooperation with leading global technology companies, including German FEV, German EDAG, German IAV, Austrian AVL, and Canadian MAGNA.

This is certainly not because Evergrande’s social skills are too strong. Everyone wants to find a rich friend when they come out to hang out. But the downside is that when you have no money, your friends’ faces turn ugly faster.

As Evergrande’s financial problems break out in 2021,Xu Jiayin’s “world-class circle of car company friends” soon became a “world-class circle of creditors.”

As early as around October 2021, news broke that Evergrande Automobile was in arrears with suppliers, which eventually caused the Tianjin production line to stagnate. Another project, "Evergrande Health Valley" and new energy vehicle living space facilities, also suffered from arrears with supplier payments and project payments, causing some projects to be suspended. Evergrande's production staff at its manufacturing bases in Shanghai and Nansha have also begun taking paid vacations, and the launch of Hengchi 5 has been delayed as a result.


Picture | On March 27, 2022, Hengchi 5 "Pay close attention to quality to ensure mass production" supplier conference was held simultaneously in Shanghai, Tianjin, Guangzhou and other places.

There are reports that all suppliers are now unwilling to cooperate with Evergrande Automobile. ——Not to mention cooperation, it would be good if we don’t collect debts. As funds were cut off and stocks were suspended, what was once a circle of friends turned into a circle of creditors. As of the end of 2022, Evergrande Automobile has total assets of 115.2 billion yuan and a debt of 183.9 billion yuan.

It is impossible to pay back the money, you can only reduce labor costs. The financial report disclosed that from 2019 to 2022, the number of Evergrande Automobile employees decreased from 9,207 to 4,506. At the end of March this year, the number of Evergrande Automobile employees had dropped to 2,795. I just don’t know if the boss has defaulted on their N+1 compensation...

Constant big becomes constant small

Over the years, Evergrande has given the impression to the outside world that it has a big business and rich wealth. Wherever Boss Xu goes, he takes the money.

The first people to feel this "money ability" should be football fans. In 2010, Xu Jiayin purchased the Guangzhou Football Team and half of the national team was bought by him. In 2012, Xu Jiayin offered an annual salary of US$10 million and hired world champion coach Lippi. And they have continuously spent huge sums of money to purchase world-class players such as Conca, Paulinho, and Barrios. Many Evergrande stars at that time could earn annual salaries of hundreds of millions of yuan. Evergrande thus began its nearly ten-year dominance of domestic football.


This is Evergrande’s consistent style: spend the most money, buy the best things, and do the biggest things. This is also the basic logic behind what Xu Jiayin said: “Buy, buy, buy, big, big, good, good, good.”

It seems that as long as you have money, it is easy to get things done. However, Evergrande's investment in football does not include financial returns, so of course it can be smashed hard. But what if you need to make money? The story of mineral water proves that just throwing money at it cannot get things done.

In 2013, Guangzhou Evergrande won the Asian Football Championship. At the moment of winning the championship, Evergrande Ice Spring occupied the most prime TV advertising position. Since then, it has also spent huge sums of money on advertising and occupying shelves.

According to Xu Jiayin's estimate, Evergrande Ice Spring's sales will reach 10 billion and 30 billion in 2016, but Xu Jiayin seems to have underestimated the difficulty of operating mineral water. You know, Nongfu Spring, established in 1996, only exceeded 30 billion in sales in 2022, and has been operating for 26 years. There are reports that Evergrande Bingquan invested more than 7 billion and suffered a loss of about 4 billion. Today, Evergrande Ice Spring has basically disappeared from the shelves.

Compared with mineral water, building a car will only be more complicated.

Evergrande Automobile had a very short peak. Driven by Evergrande's financial resources and a series of cooperative capital, the share price of Evergrande Automobile has also been rising. At the beginning of 2021, the market value of Evergrande Automobile once exceeded HK$700 billion. Although Evergrande Motors had not yet delivered its cars at the time, the market believed that the wealthy Evergrande could replicate the success of the Guangzhou Football Team.


When the tide goes out, Evergrande becomes a naked swimmer. Two years of huge investment did not yield much return. Facts have proved that this car company cannot survive independently without external blood transfusion: products are delayed in delivery and suffer serious losses.


On April 1, 2022, Evergrande Motors was suspended due to failure to report financial results. This time it lasted 482 days. Not long ago, Evergrande Auto resumed trading, but its share price quickly plummeted 68.44%, and its market value evaporated by nearly HK$23.6 billion. Today, Evergrande Automobile’s stock price is only 2% of its peak. It is a truly small car company.

Evergrande Automobile's sales volume is even more shabby. So far, Evergrande has only delivered one car, the Hengchi 5. After pre-sales began, Evergrande claimed that there were a total of 37,000 orders. However, as of the end of May 2023, Evergrande had only delivered more than 1,000 new energy vehicles.

In fact, it doesn’t mean much whether this number is 1,000, 500, or 2,000.In third-party market share statistics, this is counted as 0%.

Of course, the promise of "good, good, good" was not fulfilled. Xu Jiayin claims that Hengchi 5 is the best SUV under 300,000 yuan. However, according to the feedback of car owners after the launch, the quality of Hengchi 5 is very worrying. For example, the car's central control screen has a phenomenon of text over text, the battery life is marked as 602 kilometers, but it can only run more than 300 kilometers, the brakes also make abnormal noises, and L2 assisted driving cannot be used...

Judging from Hengchi 5’s current sales volume, product reputation, and Evergrande’s poor financial situation, this car’s market future is very limited—this is already the most optimistic statement.

In 2023, new car-making forces will truly enter the phase-out period. According to a research report by Cinda Securities: Some second- and third-tier brands are gradually being eliminated and withdrawing from the Chinese market, and weak new car-making forces may be acquired and integrated.

The actual situation is likely to be worse. Specifically, not every car company is eligible to be acquired and integrated. For example, WM Motor has taken the lead in exiting the market, but there are no major car companies to integrate WM Motor. You know, at its peak, Weimar was able to sell 40,000 units annually, while Evergrande Automobile did not even have cumulative sales of 2,000 units. Judging from the investment stories and rumors of Xpeng, Leapmotor, and WM Motor this year, a car company’s sales volume directly determines the level of its backers.

Therefore, the question before Evergrande Automobile is, after the Newton Group’s share acquisition is suspended, who will acquire it? And the answer is probably pessimistic.