China has another unlikely partnership between a real estate developer and an EV maker.
This time it’s Hawtai, a Chinese automaker with both traditional fossil fuel vehicles and new energy vehicles in its product lineup who formed a strategic cooperation agreement with R&F Group, one of the top 10 listed real estate developers in China, to collaborate in the new energy vehicle sector.
Under this agreement, R&F Group will buy a stake in Hawtai, which is headquartered in Beijing, said the automaker on its website over the weekend, without revealing any further details.
With this deal, R&F Group, which has total assets worth RMB 366.2 billion (USD 53.2 billion) became the second real estate developer in China to foray beyond its core property business and into the world of EVs. The first was China Evergrande Group.
China’s real estate industry has become tightly regulated to cool off an over-heating market. As a result, developers who have earned a great fortune during a more than 20-year-long golden era of Chinese real estate, have been trying to engage in industries that are currently encouraged by the government.
Evergrande was a pioneer in targeting the new energy vehicle industry. It started by financing Faraday Future but cancelled that deal in late December 2018 after the two failed to agree over a series of matters including branding. The real estate developer later went on a veritable global shopping spree, grabbing a handful of assets in the EV sector, to roll out its first mass-produced EV late June.
R&F followed this example as its core business is also losing growth momentum. The real estate developer sold houses worth RMB 60.22 billion (USD 8.7 billion) in the first half of this year, up 6% year-on-year, according to unaudited data disclosed by the company for investors’ reference. That represents a drastically slowing sales growth. In 2018, its total sales of RMB 131.1 billion (USD 19 billion) represented a 60% year-on-year growth.
Hawtai has 8 different self-branded models of pure electric passenger vehicles on sale and also controls an electric van producer, the Shanghai-listed SG Automotive Group. But it, too, needs partners with financial muscle to help it find its feet in the competitive EV landscape.
Two weeks ago, Chinese business media outlet Caijing reported that Hawtai has stopped production at three of its plants in North China’s Tianjin and Ordos, East China’s Rongcheng and has defaulted on paying employees’ salaries of more than RMB 7 million (USD 1 million).