Shares of China Evergrande New Energy Vehicle Group Ltd (HK:0708) plunged 23.8% this morning following the news of its vice chairman’s detainment. The shares were halted for trade early morning until the company confirmed the news. After the shares resumed trading, 0708 stock was down 7.2% as of the last check. China Evergrande New Energy Vehicle Group is the electric vehicle (EV) unit of the embattled property developer China Evergrande Group (HK:3333).
The company is based in Guangzhou and manufactures electric sedans, SUVs, and buses.
Here’s What Happened
China Evergrande New Energy Vehicle announced that its executive director cum vice chairman, Liu Yongzhuo, was detained by the police on suspicion of “illegal crimes.” No further details were shared by the company.
Its parent company, China Evergrande’s founder and chairman, Hui Ka Yan, is also under legal scrutiny by the Chinese authorities. It is one of China’s most indebted real estate developers, with over $300 billion in debt. The company is struggling to keep its financials afloat amid heavy debt obligations that are already due and defaulted.
More and more companies are coming under the Chinese regulator’s radar after the authorities started a strict crackdown on its technology sector in 2021. Also, the pandemic-led macroeconomic turmoil has severely impacted China’s property sector, leading to significant debt defaults by major players.
China Evergrande Auto Stock Price Performance
On January 1, the company announced that the proposed sale of $500 million worth of shares to American EV maker NWTN Inc. (NASDAQ:NWTN) was scrapped. Since then, shares of China Evergrande’s EV unit have been on a downward spiral, losing 18.6% year-to-date. China Evergrande Auto was started in 2019, but the company has been facing liquidity issues and is unable to continue production owing to financing woes.
