“Tesla China” suspends production of electric vehicles because of lack of customers, expected to lay off 10% of employees

China’s Evergrande new energy vehicle group said that in mid-September it had begun mass production of the Hengchi 5 at a factory in the northern city of Tianjin and had delivered the first 100 vehicles by the end of the month. ten.

However, an unnamed source said that the company had to suspend production because there were not enough orders for the electric SUV. Previously, Hengchi claimed to have received 37,000 orders for the Hengchi 5 model. But this is only the number of customers who expressed interest in the car, not having any strings attached to the car order. A small number of customers who signed a deposit contract to buy this model will be refunded by the company if they change their mind within 15 days from the date of deposit.

In addition, the source also added that many Evergrande employees have not even received their October and November salaries yet. According to Reuters, Evergrande plans to lay off 10% of workers and suspend pay for 25% of employees. within 1-3 months.

Hengchi 5. (Artwork)

Evergrande, once China’s best-selling property developer, has become the epicenter of a worsening debt crisis that has left many developers defaulting on overseas debt obligations in the past few years. Last year, many people had to negotiate restructuring.

Chairman Hui Ka Yan has vowed to shift the group’s main business within 10 years from real estate to an automotive joint venture and produce 1 million vehicles a year by 2025.

The suspension of Evergrande’s EV arm comes as automakers and investors brace for a downturn in the world’s largest auto market due to a slowing economy, despite the incentives of government starts in June to boost sales, such as tax cuts and subsidies. Competition in the electric vehicle sector is also intensifying, with Tesla cutting prices and offering incentives in China that has weighed on other loss-making rivals.

Currently, Hengchi 5 is the only model ever launched by Evergrande, but the company has introduced many EV models in the production plan including Hengchi 1 (D-segment sedan), Hengchi 2 (B-class car) model. , Hengchi 3 (large luxury SUV), Hengchi 4 (7-seat MPV) and Hengchi 6 (SUV).

Reference: Reuters