China’s Second Largest Real Estate Developer Evergrande Vows to Take on Tesla

By now, we all know China is the largest market when it comes to EVs, and this has sparked a train of new EV start-ups to emerge domestically. Some are your typical startup companies that are actively looking for investors and trying to gather enough investment to make it to production. Then there are also quite few well-established companies with no prior automotive experience coming into the game.  Their advantage? Extraordinarily deep pockets. One of those is Evergrande Group. 

Evergrande is Dreaming Big

Evergrande Group (also known as Hengda Group) is China’s second largest real estate developer. Although they are new to the industry, they joined the EV race with alarmingly ambitious goals. The company has created the Hengchi car brand and wants to become the world’s largest and strongest new energy automotive group by 2025 and achieve 1 million vehicles in production and sales annually within the same time frame. 

Chinese billionaire businessman and chairman of Evergrande Group Xu Jiayin said that the company will invest a total of 45 billion dollars within a 3-year period, 20 billion this year, 15 billion next year, and 10 billion the following year.

So far, the company has not produced a single production spec Hengchi vehicle. however, its market value is greater than both Ford Motor Company and General Motors at $87 billion USD. 

Evergrande Developing 14 Models Simultaneously

They are currently developing 14 models simultaneously which is very rare. Most automotive companies will design one, maybe two, hero models first and then add more after those gain traction. Out of the 14 models, only 9 of them have been released on the company website so far. The 9 models include sedans, sport sedans, SUVs, MPVs, and CUVs, all of which will be selling under the brand name HengChi. 

The entire lineup will range from about 80,000 RMB ($12,000 USD) to 600,000 RMB ($92,000 USD), although the final pricing might be different. 

The company is most likely to launch the flagship models Hengchi 1 and Hengchi 3 first. They are a luxury sedan and an SUV. Both claim they will be loaded with technology. The company has yet to release any specifications. However, from the promotional videos and images that have been released, we can see that both cars feature a large single panel dash screen that stretches from pillar to pillar. The Hengchi 1 also features blind spot avoidance screen on both A pillars to help with pedestrian detection. 

What else do we know about Evergrande’s vehicles?

The company recently took full ownership of the remains of the Swedish carmaker Saab and its manufacturing plant in Tianjin, China from the company National Electric Vehicle Sweden – NEVS. The plant is currently producing retrofitted Saab 93s with electric drivetrains.   

We’re assuming they will adapt some technology and learnings from Saab, and use this manufacturing plant, but that waits to be seen.  

A Little Too Reminiscent of Faraday Future?

My take on this is this… As much as I would like to see more Chinese companies succeed, this situation reminds me of another Chinese EV startup, Faraday Future. Instead of putting money in research and development Evergrande seems to be selling hype instead of electric vehicles.  

Some of the Evergrande’s practice has been somewhat unorthodox. For example, employees that are hired under the Hengchi subsidiary are also required to sell real estate. Executives for the EV division also have real estate quota. All new employees for Hengchi also need to undergo intensive real estate training. They are encouraged to post ads on social media to help the company sell luxury apartments and properties. Another interesting practice is that all research and development has been outsourced to other companies. Typically, this is the heart of the entire operation and it is kept closely within the company.

That indicates to me that the company does not have enough confidence in the automotive division or its plan to emerge as the largest and strongest EV brand. So, it is quietly preparing its staff to be ready to switch their career at a moment’s notice.