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Author丨Zhang Jingbo
Source: Huashang Strategy
On March 22, 2022, a photo of Evergrande’s internal meeting circulated on the Internet brought Xu Jiayin, chairman of the board of directors of Evergrande Group, who had not been seen for a long time due to debts, back to people’s vision again.
This time, he wants to launch the final battle.
At the mobilization meeting held by Evergrande New Energy Automobile Group, Xu Jiayin issued a death order to Evergrande Automobile:
“Fight day and night, work hard, work hard for three months, and achieve mass production of Hengchi 5 on June 22.”
It could be seen that Xu Jiayin was very anxious. Evergrande, which is deeply in the debt crisis, urgently needs a victory to boost morale and get out of the crisis. Xu Jiayin has placed high hopes on the car, and it is also regarded by the outside world as Evergrande’s last straw.
In January 2019, Evergrande acquired a 51% stake in NEVS (National Electric Vehicle Sweden Co., Ltd.) at a price of US$930 million, officially entering the new energy vehicle industry.
That year, the new energy vehicle market had not exploded, and Evergrande had not yet been exposed to a debt crisis. Standing on the cusp of the times, Xu Jiayin shouted a magnificent slogan with high spirits:
In 2035, the annual production and sales volume will exceed 5 million, becoming the largest and most powerful new energy vehicle group in the world.
The capital market has also given Evergrande great enthusiasm.
In August 2020, Evergrande Health, a Hong Kong-listed company responsible for investing in the acquisition of NEVS, officially changed its name to Evergrande Auto.
Just one year later, without a single car being delivered, Evergrande’s stock price soared from HK$6 to a maximum of HK$72, and it has a market value of more than 700 billion yuan.
However, compared with the frenzy of the capital market, Xu Jiayin’s road to car manufacturing is not so smooth.
Although as early as August 2020, Evergrande Motors released 6 models in one go, covering almost all passenger car fields such as sedans, SUVs, and MPVs.
But until the end of 2021, no mass-produced model has officially rolled off the assembly line.
This is not a problem in itself for the automotive industry, whose R&D cycle usually takes 2-3 years.
However, Xu Jiayin obviously couldn’t wait. Seeing that Evergrande’s debt crisis is intensifying, he urgently needs the car card to get out of trouble.
Only then did the passionate words at the Evergrande Automobile Mobilization Conference come about.
Within Evergrande, Xu Jiayin’s order is the “imperial decree”. For this reason, he even issued a rule: call all employees, if no one answers after three rings, a fine of 20,000 yuan will be imposed.
Due to the strict regulations, Xu Jiayin’s orders can always be executed on time.
But this time, the “imperial decree” didn’t work either. Seeing that the deadline on June 22 is approaching, the Hengchi 5, which Xu Jiayin placed high hopes on, is also Evergrande’s first mass-produced car, and it still hasn’t rolled off the assembly line.
In fact, it was not until September 16 that Evergrande Motor officially announced that Hengchi 5 was officially mass-produced at the Tianjin factory. 3 months later than expected.
It’s a bit late, but it’s finally off the assembly line. Inside Hengchi, this is seen as an important moment.
From Evergrande’s point of view, the market seems to have responded positively to this car. According to Evergrande, in the global pre-sale that started in July, the order for Hengchi 5 exceeded 37,000 units in less than 15 days.
Even Liu Yongzhuo, chairman of Hengchi New Energy Company, could not restrain his excitement: The market response was very good, better than expected, and the big sale is a foregone conclusion.
However, consumers do not seem to buy it.
With the end of October, the first batch of 100 Hengchi 5 new cars were delivered to consumers one after another. Many car owners complained on the Internet: overlapping text on the car-machine system, abnormal noise from the brake pedal, and discounted battery life…
Immediately afterwards, it was reported that the Tianjin factory planned to lay off 60% of its employees.
Then, it was revealed that large-scale work stoppages and wage arrears… On December 2, there was more news that the headquarters of Evergrande Automobile Group will be disbanded.
Xu Jiayin’s dream of building a car began in 2018.
In the summer of that year, Xu Jiayin, who always liked to show off her Hermès belt, hurried to Los Angeles, USA, to meet a “predecessor” who made cars – Jia Yueting, who was suffocating for his dreams.
Xu Jiayin originally planned to join hands with Jia Yueting to create a miracle, but the two parties broke up unhappy.
After parting ways with Jia Yueting, Xu Jiayin decided to go shirtless and do it himself. But he, who has been in the real estate industry for 20 years, is a layman in car building.
In Xu Jiayin’s own words, when Evergrande just started building cars, it needed people without people, technology without technology, and experience without experience.
Facing a gap of nearly a hundred years with Western giants, how to catch up? Xu Jiayin’s idea is to open up a road that is different from all car companies in the world in terms of strategy and tactics, called Evergrande’s car-making road.
To sum it up, there are only five words: buy, buy, buy, hehehe, circle circle, big big, good good.
In January 2019, Evergrande acquired a 51% stake in NEVS (National Electric Vehicle Sweden Co., Ltd.) at a price of US$930 million, obtained a car manufacturing license, and started a crazy car manufacturing road.
Over the next year, Evergrande launched a series of acquisitions to acquire car-making technology.
First, it spent 1.06 billion yuan to acquire a 58% stake in Shanghai Kanai New Energy, a power battery company.
Immediately afterwards, in March, the Dutch e-Traction company, one of the three giants in the in-wheel motor industry, was acquired. In May, another giant in the in-wheel motor industry, Protean, a British company…
At its peak, Evergrande acquired a company almost every month.
In September 2019, after purchasing the new energy vehicle 3.0 chassis technology from Germany’s Benteler and FEV Group, Xu Jiayin said excitedly: “Buying is very important, buy as much as you can.”
But there are always some technologies that cannot be bought. In this regard, Xu Jiayin’s solution is Hehehe and Quanquanquan, that is, to find someone to form a joint venture to build a strong circle of friends.
To this end, Xu Jiayin led Evergrande executives to fly all over the world, visited more than 40 cities in more than 20 countries, visited leading companies in various fields of the automotive industry, and discussed cooperation.
On this basis, Evergrande has opened up the entire industry chain of new energy vehicles such as vehicle manufacturing, power batteries, and in-wheel motors, and has built a luxurious circle of friends including Bosch, Continental and other world-class parts suppliers.
And then, big big.
According to LatePost statistics, from September 2019 to September 2020 alone, Evergrande has won more than 11 million square meters of land in Tianjin, Shanghai, Guangzhou and other places across the country in the name of automobile bases. It surpasses the sum of BYD’s 17 years.
This kind of land acquisition speed, I am afraid that only real estate companies can match.
According to the plan, Evergrande will build 9 production bases across the country in the future.
However, as one of the most complex and sophisticated industries in human history, the automobile industry has never been an industry that can succeed in a short period of time by buying, buying, and buying.
Ford started from the four-wheeled vehicle in 1896 to the advent of the Model T in 1908. After 12 years of hardships, Ford suffered many failures during this period.
Toyota started building cars in 1937, and it took 18 years until the first sedan, the Toyota Corolla, came out in 1955.
Even Tesla, a new force in car manufacturing, has experienced more than ten years of ups and downs since its birth in 2003. During this period, it once encountered a production capacity crisis and almost went bankrupt.
Looking back at China, Li Shufu and Wang Chuanfu have mastered a lot of car knowledge through cramming before building cars.
But Xu Jiayin, a real estate developer who has never been involved in the automobile industry before, has tried to build the world’s largest and strongest new energy automobile group through buying, buying, and buying for more than ten years.
In the past, the Indians also tried to build a powerful navy through global shopping. But it turns out that this IWC navy is just for show.
First the aircraft carrier caught fire, and then the fighter planes blew up their own airport.
Judging from the information on Evergrande’s official website, Evergrande Automobile’s car-making ability is not weak, but compared to its ambitions, it is still insufficient and a little too anxious.
In 1996, Xu Jiayin, with a monthly salary of 2,000 yuan, resigned from Zhongda Group because his request for a salary increase was rejected, and turned around to found Evergrande Group.
The following year, Xu Jiayin bought the land of the former Guangzhou Pesticide Factory and built the Jinbi Garden project, officially starting the road to real estate mining.
It was also from that year that Xu Jiayin’s life seemed to be doomed to be turbulent and thrilling.
On June 8, 1997, the Jinbi Garden project officially broke ground. Xu Jiayinben intends to quickly develop real estate with a short, flat, and fast strategy to seize the real estate market.
But less than a month after the start of construction, the Asian financial crisis broke out and the real estate industry fell into a trough.
Fortunately, Xu Jiayin adopted a low-price strategy, which was nearly 20% lower than the average price in the surrounding area. The sales of Jinbi Garden were not greatly affected. The first phase of 323 houses was sold out.
Xu Jiayin made a thrilling breakthrough. But Evergrande also planted the seeds of crazy expansion because of this.
Beginning in 2006, in order to plan to go public, Evergrande began to buy land frantically: in just over a year, the land reserve expanded by 7 times.
At this time, the US subprime mortgage crisis broke out. The global capital market is in a downturn, and Evergrande has to press the pause button on its IPO road.
Seeing that for more than a year, the funding gap caused by rapid expansion has become larger and larger, and Xu Jiayin is in a hurry. With Yang Shoucheng’s matchmaking, he went to Hong Kong to invite Zheng Yutong to dinner.
After that, for the next three months, I went to Repulse Bay No. 12 every week, and accompanied Zheng Yutong to hoe the big D.
Finally, with the support of Hong Kong bigwigs such as Zheng Yutong and Liu Luanxiong, Evergrande was listed on the Hong Kong Stock Exchange on October 5, 2009. Xu Jiayin not only solved the urgent need, but also became the richest man in mainland China for the first time.
Having encountered the financial crisis twice and retreated unharmed, this undoubtedly encouraged the adventurous spirit of Evergrande and Xu Jiayin.
Therefore, when the state made it clear in 2016 that “housing should not be used for speculation” and repeated orders to deleverage, many real estate companies were shrinking, but Xu Jiayin confidently chose to increase leverage and acquire land.
In the end, Evergrande embarked on a debt-ridden road of no return under the pressure of ever-tightening real estate policies. As of 2021, the total liabilities will be as high as 1.97 trillion yuan.
2021 is also the year when the new energy vehicle market will explode. Evergrande, which has been honing its knives for two years, could have made a big show of its ambitions.
However, the group company, which has already transfused 47.4 billion yuan into the automobile business, is now unable to replenish it.
Faced with overwhelming debt collectors and the pressure of the Baojiao Building, Xu Jiayin may have issued the most military orders in his life.
In order to ease the financial pressure, in the past year or so, he has changed from buying, buying, and buying to selling and selling. Even the Evergrande Shenzhen Bay Super Headquarters had to be sold at a “fracture price” of 7.5 billion yuan.
The group company is still like this, but Evergrande Automobile, a subsidiary company, is even worse.
Despite Xu Jiayin’s passionate words of “working hard for three months to achieve mass production” at the beginning of the year, and despite Hengchi Chairman Liu Yongzhuo’s statement that the big sale is a foregone conclusion, Evergrande Auto is still caught in a storm of wage arrears and layoffs.
Even on December 2, it was reported that the headquarters of Evergrande Automobile Group would be disbanded.
Rumors abounded, and Xu Jiayin himself appeared at the Evergrande Group Baojiaolou work meeting on the evening of the 2nd, dispelling all kinds of speculation about Evergrande and himself in one fell swoop.
At this time, it has been 4 years since Evergrande was born.
Four years ago, Xu Jiayin had placed high hopes on new energy vehicles. After Evergrande fell into a debt crisis, the automobile business even became Evergrande’s lifeline.
In this sense, Evergrande Automobile is Xu Jiayin’s last battle.
But this straw is also precarious now, making Xu Jiayin’s final battle uncertain.
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