Evergrande’s Goal of Toppling Tesla Looks More and More Unlikely

(Bloomberg) -- China Evergrande Group's ambitious goal of toppling Tesla Inc. as the world's biggest electric-vehicle maker is looking more and more unlikely after it pushed back trial production of cars until the end of this year.

As recently as last week, Evergrande said trial production may start in the first half of 2021. But on an earnings webcast late Wednesday, Evergrande's billionaire chairman Hui Ka Yan said trial runs will now begin around the end of the year. Mass deliveries should start next year, he said.

It's just the latest delay to Hui's lofty goal, first announced in March 2019, of becoming the world's biggest EV maker within three to five years. Back then, the firm said it would start selling vehicles “soon.”

While Evergrande, China's biggest property developer, has since poured billions of dollars into EV-related acquisitions and building factories, it doesn't actually make vehicles in a meaningful way. It's conducted a few test drives and unveiled a range of show models but done little beyond that. Meanwhile, Tesla CEO Elon Musk Wednesday tweeted his new factory in Texas will need more than 10,000 hires through 2022, double the previous pronouncement.

Still, the constant setbacks haven't stopped investors from piling into shares of its listed EV arm, China Evergrande New Energy Vehicle Group Ltd., giving it a market value greater than Ford Motor Co. China is already the world's biggest EV market and sales are forecast to surge as vehicles get cheaper and buyers seek cleaner and greener rides. Sales may rise 50% this year, according to research firm Canalys.

Evergrande NEV last week said it's targeting annual production of more than 1 million vehicles a year by 2025, and sales of 5 million cars by 2035, aiming to “become the world's largest and most powerful new energy vehicle enterprise.”

Read more: Evergrande EV Unit's Loss Widens With No Sign of Mass Production

That would mean Evergrande NEV is selling about one-sixth of all EVs in China by 2025, at which point it estimates EV sales worldwide will total 14 million cars a year, according to a company presentation.

©2021 Bloomberg L.P.