Shanghai (ZXZC)- On March 22, Evergrande Health, a listed subsidiary of Evergrande Group, warned of a year-on-year widened net loss in 2019 due to its investment in new energy vehicle (NEV) business.

（Photo source: Evergrande Health)

The company said it is expected to record a net loss of roughly RMB4.9 billion for the year of 2019, versus the net loss of around RMB1.428 billion for 2018. The loss “is primarily attributable to the development of the new energy vehicle business, which is in its investment stage and resulted in an increase in fees related to the purchase of fixed assets and equipment, research and development and interest expenses,” according to the latest profit warning. The NEV business unit is forecasted to post a net loss of RMB3.2 billion.

The real estate titan Evergrande Group is renowned in automobile industry for its cash-burning investment in NEV building cause. In last November, the group announced the strategic partnership with a total of 60 world's leading auto parts suppliers at one go, including such well-known firms as Bosch, Magna, Continental AG, ZF Group, thyssenkrupp AG, JTEKT and BASF.

Xu Jiayin, chairman of Evergrande Group, said then Evergrande had prepared a great deal of budget for its NEV development cause--RMB20 billion for the year of 2019, RMB15 billion for 2020 and RMB10 billion for 2021.

The group launched its NEV brand “Hengchi” in last August. According to the Chinese billionaire, the first Hengchi-branded model, dubbed “Hengchi 1”, would make its debut in the first half of 2020. The series production of vehicles across the entire lineup would start in 2021.

To help steer product development, in last September, Evergrande New Energy Automotive Group, the group's EV arm, signed up five global auto engineering companies, including three German companies— FEV Group, EDAG Engineering Group and IAV Group— as well as Austria's AVL Group and Canada's Magna International.

Those engineering companies would help Evergrande New Energy Automotive design and develop 15 EV models, ranging from full-size luxury to midsize and classic vehicles, Evergrande Group said.

On October 15, 2019, the EV unit formed cooperation with 15 world-class automobile designers from countries like Germany, Italy, the U.S., France and Japan, displaying the group's determination to develop eye-catching NEV models.

Besides, Evergrande Group signed agreements with local governments to build two major EV plants in the south city of Guangzhou and northeast city of Shenyang.