China’s Evergrande says head of EV arm detained

BEIJING, China  —The head of heavily indebted Chinese property developer Evergrande’s electric vehicle unit has been detained, the firm said Monday, the second executive from the company to come under investigation in recent months.

Once China’s biggest real estate developer, Evergrande has reported more than $300 billion in liabilities and its troubles have become a symbol of the nation’s years-long property crisis.

The firm’s electric vehicle arm NEV said Monday that Liu Yongzhuo — listed on its website as its president — had “been detained in accordance with the law on suspicion of illegal crimes”.

It did not give further details on why exactly Liu had been held.

READ: Pressure on China Evergrande intensifies; chairman under police watch

Chinese law allows for individuals to be detained for extended periods while they are under investigation.

Those placed under investigation are usually convicted.

Liu’s detention follows Evergrande’s announcement in September that chairman Xu Jiayin was “subject to mandatory measures” from Chinese authorities over “crimes”.

Liu, born in 1981, has also served as chairman of the board of an Evergrande-owned football team based in the southern city of Guangzhou.

Cash flow woes

At the time of its establishment in 2019, Evergrande NEV said it aimed to become the world’s leading manufacturer of electric cars in just “three to five years”.

But the EV unit’s cash flow and growth outlook were hit hard by its parent company’s increasingly dire financial situation.

Evergrande NEV indicated in March 2023 that it was fighting to secure liquidity in order to stay afloat.

On Monday, just before it announced Liu’s detention, shares in the EV firm were halted briefly on the Hong Kong Stock Exchange “at the request of the company”, the company said.

READ: What’s next for China Evergrande with its chairman under police watch?

Less than an hour after restarting trading at 1:00 pm (0500 GMT), the EV firm’s share price was down 13 percent.

The announcements come after the failure of a deal that would have sold a stake in Evergrande NEV to NWTN, a Dubai-based firm specializing in clean-energy vehicles.

Following a long delay, the firm began production of its first EV model — the Hengchi 5 — in 2022.

Evergrande NEV shares were suspended for 15 months between April 2022 and July 2023, owing to the firm’s failure to publish financial results.

It is currently valued at around $570 million, having lost almost half its value in five years.

As the real estate giant’s woes deepened, a Hong Kong court last month gave it until late January to put together a restructuring plan, extending a deadline that could lead to its liquidation.