Evergrande electric vehicle unit loses $80 billion in worst stock rout

 China Evergrande New Energy Vehicle Group Ltd. sank as much as 22% Thursday after its parent said the unit lost 4.8 billion yuan ($740 million) in the first half

Shares of China Evergrande Group’s electric vehicle unit are collapsing in Hong Kong, wiping about $80 billion from what was the property developer’s most valuable listed asset.
China Evergrande New Energy Vehicle Group Ltd. sank as much as 22% Thursday after its parent said the unit lost 4.8 billion yuan ($740 million) in the first half.

The EV business’s market value was about $87 billion at its April 16 peak, greater than that of Ford Motor Co. and almost four times the capitalization of China Evergrande itself at the time. Evergrande NEV shares are down 92% since, the worst performance in the Bloomberg World Index and lagging even China’s tutoring stocks. Evergrande’s subsidiaries are being punished on concern the world’s most indebted developer will need to sell assets at a steep discount amid mounting pressure from Beijing. Shares of listed businesses -- including the 65% stake it owns in Evergrande NEV -- are the most liquid if Evergrande needs to generate cash quickly. Evergrande in May raised $1.4 billion from the unit in a heavily discounted share sale.

“It’s very obvious that Evergrande New Energy is short of money,” said Castor Pang, head of research at Core Pacific-Yamaichi International H.K. Ltd. “Now that the parent company has a liquidity problem, it’s impossible for Evergrande New Energy to meet previous targets for car production.”

The electric car upstart was already a capital-intensive project for Evergrande Chairman Hui Ka Yan, who funneled billions of yuan into the business in a bid to make it “the world’s largest and most powerful new energy vehicle group” by 2025. Previously known as Evergrande Health Industry Group Ltd. before a name change last year, the company still generates the majority of its revenue from its health business.