Evergrande New Energy Vehicle Losing $1.7 billion in Profit in Advance?

It's not that easy to build a car and make money! Especially in the car market under the cold winter, especially difficult also! Even if new-energy vehicles are still growing at a high rate and policies are in place, it will be hard for new entrants to get a place quickly and make a lot of money. Evergrande New Energy Vehicles Advance Loss On the evening of 5 March, Evergrande Health announced that "The Group expects to record a net loss of approximately RMB1.4 billion for the year ended 31 December 2018 (2018) and a net profit of approximately RMB300 million (2017) for the year ended 31 December 2017." Regarding the main reasons for the expected net loss for 2018, Evergrande Health explained in the announcement that the Group's health management results remained stable and it expected to record a net profit similar to that for 2017 in 2018; The Group's New Energy Vehicle segment is expected to record a net loss of approximately RMB1.7 billion in 2018, as the Group incurred losses after its investment in Smart King Ltd. (the Group's associate) in 2018 and expenses related to loan interest charges, etc., through equity accounting. Among them, Smart King is a new company established by Hong Kong Shiying Company and the original shareholders of FF represented by Jia Yueting in the form of joint venture. On June 25, 2018, Evergrande acquired a 100% stake in Hong Kong Shiying Company for HK $6.746 billion, indirectly acquiring 45% of shares in Smart King Company Right to become the largest shareholder. However, holding hands with Jia Yueting may not be a correct choice for Evergrande. Before the honeymoon, Jia Yueting wanted to kick Evergrande out, and many days later, on the last day of 2018, the two sides announced a settlement. In the restructuring agreement signed between the two sides, Evergrande will no longer need to inject capital into the FF, and Jia Yueting will be able to buy back 32% of Evergrande's FF stake within five years. In addition, Evergrande acquired all assets of FF in China--Nansha Plant for US $200 million. It seems that Evergrande New Energy Vehicle business still can't get rid of the influence from FF due to the existence of equity relationship. Losses Expected Evergrande's New Energy Vehicle business is also expected to lose money in 2018. Throughout the new energy automotive industry chain, companies are having a hard time. A number of listed companies in the new energy automotive industry chain have issued huge earnings announcements since, which are caused by the adjustment of goodwill impairment disclosure policy, and behind which the new energy automotive industry as a whole has entered a period of adjustment. Although the sales of new energy vehicles continue to soar, but really into the profitable phase of the car companies can be counted on their fingers. Although Tesla posted two consecutive quarters of earnings in the third and fourth quarters, it still lost money. In 2018, Tesla posted revenue of $21.461 billion, up 83% from a year earlier, but a net loss of $1.063 billion, narrower than the previous year's net loss of $2.241 billion, but still a loss. In addition, Weilai, one of the new forces in car building in China, On the evening of 5 March, unaudited financial reports for the fourth quarter of FY2018 and 2018 were released. Weilai Automobile reported total revenue of RMB4, 951.2 million in 2018, with a net loss of RMB9, 639 million, up 92.0% year-on-year. Dreams are plentiful, reality is skeletal. Car-building is a long-term investment, short-term benefits are difficult to see, because its attributes "heavy assets, technology-intensive", has decided that it is difficult to see in the short term returns. New energy vehicles, really want to say love you not easy. Weilai has raised doubts because of losses, Li Bin has responded that Weilai automobile is not a mature company, should use losses or investment to describe Weilai to spend money need to think. In his view, Weilai is still just broken seedlings, a seedling is not likely to grow into a tree immediately. "Although it looks very fragile, but there are still a lot of people to water us, we are also bathed in the sun. Water is our investors, sunshine is our users, I believe there will be growth!" Li Bin said with unlimited emotion. For the new entrants of new energy vehicles such as Evergrande, it is still in the rapid growth stage and will not lose money or be impossible.