Evergrande’s woes are beginning to be felt in Europe, with Reuters reporting that the property giant’s electric vehicle unit has gone into talks with US and European venture capital firms and other companies about a possible sale.
The company, National Electric Vehicle Sweden (NEVS), is reported to be up for sale for $1bn. According to Reuters, its chief executive Stefan Tilk said that the company had funds ‘for a good while’. The newswire also reported that Evergrande has stakes in Koenigsegg, which is another Swedish car company and the German firm Hofer.
Evergrande and NEVS declined to comment on the story for Reuters.
The potential sale of a vehicle firm in the current climate is liable to be tricky, given problems in the supply chain around the computer chips used in production. As Expert Investor reported last week, the auto sector within Germany is currently teetering on the brink of collapse due to ‘[…] the serious bottlenecks in global semiconductor production are plunging Germany’s car transporters into an existential crisis’.
It is understood that Volkswagen, Opel, and Skoda have all either reduced or halted production due to the current shortage. Bosch was also reported to have said that supply chains in the industry were ‘not fit for purpose’.
The problem is also not temporary, with predictions coming thick and fast that it—along with increased inflation—is likely to spread into and across 2022. A note from Moody’s, as reported by CNN Business this week, said that supply chain disruptions were ‘showing up at every corner’.
That said, however, Expert Investor also recently reported that Sweden’s Polestar, which views itself as a challenger to Tesla, and US car manufacturing giant Ford are ramping up their respective growth plans.
Evergrande looking to offload one of its companies makes sense in the context of the company’s current woes, having defaulted on multiple debt repayments in recent weeks. It has been rumoured widely that the company may be broken up, with the Chinese government eager to stem any potential contagion through its economy should the business implode.
Already, the property firms Fantasia and Sinic Holdings are reporting financial difficulties unrelated to Evergrande, implying that there is something rotten within the economy that needs to be excised.