Evergrande NEV hits new roadblock as pre-orders delayed

Would-be buyers of China Evergrande New Energy Vehicle's (0708) much-delayed electric car are going to have to wait a bit longer again.

Plans to start taking pre-orders for the Hengchi 5 sports utility vehicle as soon as tomorrow have been pushed back indefinitely, according to a person familiar with the matter.

The latest delay was caused by Shanghai's grueling Covid lockdown and related supply chain snarls, according to the person.

The company said in a March filing that it aimed to start mass production of Hengchi 5 on June 22.

Meanwhile, most Hong Kong-listed auto shares rose yesterday on a Reuters report that China is in talks with automakers about extending costly subsidies for electric vehicles that were set to expire in 2022.

The move is aiming to keep a key market growing as the broader economy slows, sources said.

China's expensive incentive program has been credited with creating the world's largest EV market. Since the subsidies began in 2009, some 100 billion yuan (HK$116 billion) has been handed out to buyers including commercial fleet operators up to the end-2021, according to an estimate by Shi Ji, an auto analyst with China Merchants Bank International.

The full terms of the 2023 extension, including the amount of the subsidies and which vehicles would qualify for them, have not been finalized, sources said.

One specific measure under review would roll back a planned purchase tax increase for qualified electric and partly electric vehicles, they said.

For this year, there is no purchase tax for such vehicles, but the government had planned to raise the tax to 10 percent of the purchase price in 2023. Instead, the rate would be raised to just 5 percent, they added.

The EV subsidy scheme was originally scheduled to be phased out by the end of 2020, but Beijing extended it for two years to spur demand in the wake of the Covid pandemic.

The government also cut the number of subsidies per vehicle over the years as demand surged and manufacturing costs fell. For example, the subsidy for a plug-in hybrid with a range of more than 300 kilometers was cut by about 20 percent to the equivalent of about US$1,900 (HK$14,820).

Separately, Shanghai authorities have granted approval to 864 of the city's financial institutions to resume work as it gradually eases a city-wide lockdown.