China Evergrande New Energy Vehicle Group, the electric-vehicle unit of the troubled property developer China Evergrande Group, has agreed to sell a 28% stake to Dubai-based startup NWTN Inc. in a deal worth $500 million. This investment comes as a lifeline for Evergrande NEV, which has been facing financial difficulties and recently reported an $11.7 billion loss for 2021 and 2022.
Under the agreement, NWTN will acquire the stake in Evergrande NEV in exchange for shares and a majority representation on the EV maker's board. However, the completion of the transaction is contingent on Evergrande Group's debt restructuring, as well as regulatory and shareholder approvals.
NWTN, founded by Chinese entrepreneur Alan Nan Wu, sees this investment as an opportunity to tap into the growing demand for electric vehicles in the Middle East, particularly in the United Arab Emirates. By partnering with Evergrande NEV, NWTN hopes to contribute to the expansion of EVs in the region.
The deal is expected to be finalized in the fourth quarter of this year, providing some relief to Evergrande NEV's financial woes. The company's stock is a crucial component of Evergrande Group's debt restructuring, which is considered one of the largest in Chinese history. As part of the restructuring plan, Evergrande has suggested creditors can receive a combination of new debt and instruments tied to the shares of its property-services unit, EV division, or the company itself.
At its peak valuation in April 2021, Evergrande NEV was valued higher than well-established automakers such as Ford Motor Co. and General Motors Co., despite not having commenced sales at that time. The company began delivering electric sport utility vehicles in late 2021.
Overall, NWTN's investment provides a much-needed lifeline for Evergrande NEV, allowing the company to continue operating and potentially thrive in the highly competitive EV market. It also highlights the increasing interest and investment in the electric vehicle industry worldwide, as companies scramble to capitalize on the shift towards sustainable transportation.