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Chinese Real Estate Developer Now Electric Vehicle Maker Announces Production Capacity


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China's Evergrande Health aims to build production capacity for up to 1 million EVs in 3 years

HONG KONG Forina Fu and Shellin Li reporting for Reuters: China’s Evergrande Health said on Friday it aims to build production capacity for 500,000 to 1 million electric vehicles in three years.

The company made the announcement at an earnings conference.

Its parent company, property developer China Evergrande Group, said earlier this week it will start producing its first electric vehicles in June as part of a goal to become the world’s largest new energy vehicle (NEV) company within the next three to five years.

Reporting For Reuters by Forina Fu and Shellin Li; Writing by Clare Jim; Editing by Muralikumar Anantharaman


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TACH's TAKE: Think we are paranoid? well wake the f--k up! It's in Silicon Valley's and China's best interest to emasculate automobiles and create a ground swell for a "Transportation Appliances" industry that replaces traditional automobile design and manufacturing. In a new electric and autonomous transportation world they can both dominate, just how many Chinese citizens with advanced degrees earned at American universities are employed at digital transportation companies in Silicon Valley?

TACH's TAKE: Electric Vehicles - An Honest Alt-Fuel Solution? Or A Chinese World EV Domination Tulip-like Frenzy?

MORE: March 19, 2019; Chinese Real Estate Developer Claims It Will Beat Tesla (without Chinese Government help I'm sure)

MORE: From Bankrupt To Ok With Chinese Government Reliant Evergrande Health, a unit of property developer Evergrande Group, which paid HK$6.7 billion (US$854 million) last month for 45 per cent of the cash-starved start-up. Investor Save the Faraday Future

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MORE: EV startups, glut prod Beijing to dial back on new plants. Behind generous subsidies, Beijing has succeeded in making China the world’s largest market for battery-electric vehicles.

MORE: China Forces Car Makers To Go Electric: Starting in January, all major manufacturers operating in China—from global giants Toyota Motor and General Motors to domestic players BYD and BAIC Motor—have to meet minimum requirements there for producing new-energy vehicles, or NEVs (plug-in hybrids, pure-battery electrics, and fuel-cell autos). A complex government equation requires that a sizable portion of their production or imports must be green in 2019, with escalating goals thereafter.

MORE: Bloomberg reported that although Automakers historically and typically want their cars to stand out, China’s push for greener vehicles is prompting Toyota, Fiat Chrysler, Honda and Mitsubishi to resort to an unusual move: they’re set to sell the same car. The four carmakers all plan to sell an electrified SUV developed by Guangzhou Automobile Group Co., the Chinese manufacturing partner they share.

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In an interview, Herbert Diess laments the great dependence on Asian suppliers and the US companies' lead in digitization.

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MORE: Commentary: Freezing U.S. fuel standards is a gift to China's auto industry
China’s potential dominance in the changing auto sector matters. Auto manufacturing constitutes about three percent of U.S. GDP, and accounts for the most jobs of any manufacturing sector. Losing these jobs, and this market share, to another country is no laughing matter, especially in the auto-heavy Midwest and Southeast states: in Michigan, Ohio, and Tennessee, auto industry jobs make up 10 percent or more of the entire state labor force.

MORE: Just-in From Bloomberg: U.S., with eye on EVs, set to limit China investments

Real estate developers' entry bodes well for China's EV ambitions

Commentary By Yang Jian | 2018/8/17

SHANGHAI -- Since last year, several major Chinese real estate developers have placed a bet on electric vehicles. They see synergies to be generated between EVs and their existing business, rather than short-term financial gains.

Their investments will help Chinese EV makers better cope with high capital expenditures and weather potential market risks.

Among the investments real estate development companies have made in EV makers, the one that has received the most extensive media coverage was carried out by China Evergrande Group, China’s second-largest property developer ranked by sales.

And the target company -- Faraday Future-- is an EV startup founded by founded by Chinese entrepreneur Jia Yueting in Los Angeles. Until two months ago, Faraday Future was teetering on the verge of bankruptcy from a severe cash crunch.

In June, Evergrande Group arranged for a subsidiary, Evergrande Health Industry Group, to acquire 45 percent of Faraday Future for 6.7 billion Hong Kong dollars (5.9 billion yuan).

This week, Evergrande Health, now Faraday Future’s largest shareholder, opened a new company, Evergrande FF Intelligent Automotive (China) Co., in the south China city of Guangzhou with registered capital of $2 billion (13.8 billion yuan).

Faraday Future started assembling its first vehicle, the FF 91 luxury crossover, at a leased plant in Hanford, Calif., this month. And Evergrande FF is expected to start producing the vehicle at a factory now under construction in Guangzhou in the near future.

Evergrande Group has deep pockets to tap when it comes to financing Faraday Future’s EV output. It generated a net profit of 52 billion yuan on revenue of 304.2 billion yuan in the first half.

With the powerful backing of its parent, Evergrande Health plans to build five assembly plants in China with combined annual production capacity of 5 million EVs for Faraday Future over the next 10 years.

By investing heavily in Faraday Future, Evergrande Group expects to establish a leading presence in the fast-growing domestic EV market. It also expects Faraday Future’s EVs to complement Everagrande Health’s premium hospitals and community health care centers across China.

In addition to Evergrande Group, two other major Chinese property developers have diversified with forays into the domestic EV industry.

China Fortune Land Development Co., China’s largest industrial park developer and operator, in December acquired a 53.4 percent interest in domestic EV startup Hozon New Energy Vehicle Co.

In the same month, Baoneng Investment Group Co., purchased a 51 percent stake in Qoros, a small Shanghai carmaker to accelerate Qoros' EV development and production.

In addition to real estate development, Baoneng, a private business conglomerate, also runs health care, insurance, auto components production and car financing businesses.

In October 2017, Country Garden Holdings, China’s largest real estate developer, disclosed plans to partner with domestic battery makers and other parts suppliers to build a large component factory for EVs in Shunde of South China’s Guangdong province.

In 2015, Beijing started reining in domestic real estate investments in a bid to cool the overheated housing market. In the past few months, the government has further tightened control on property development in China’s major cities.

The policy shift will send real estate developers in general searching for business opportunities in other sectors, and more of these companies likely will join Evergrande, Fortune Land Development and Baoneng to make their way into the EV industry in one way or another as strategic investors.