Evergrande NEV unit’s stocks plummet as China orders refund of $262M subsidies

China Evergrande New Energy Vehicle Group (NEV) plummeted by the most in almost three years after the Chinese government mandated the return of all state subsidies received by the company, further exacerbating the financial crisis of the heavily indebted developer.

Evergrande NEV’s shares tumbled by up to 26.7% to 31.5 Hong Kong cents, marking the lowest intraday level in nearly a month on the city’s stock market.

The carmaker was instructed to return 1.9 billion yuan (US$261.9 million) in subsidies from local authorities due to failure in meeting contractual obligations, as stated in a recent announcement to the Hong Kong stock exchange.

Evergrande NEV must refund the subsidies within 15 days or face the risk of losing assets like equipment, factory buildings, and allocated land for car assembly, which could significantly affect its financial condition and operations.

The subsidiary’s troubles compound the financial challenges of its parent company, Evergrande, which faced liquidation by the Hong Kong High Court in January and hefty fines for revenue falsification.

A subsidiary in Tianjin was also ordered to cease electric car production and sales but has taken steps to address the issues and plans to appeal the work-stop order.