Tuesday, 15 October 2019

THE BONFIRE OF THE HAN CHINESE RATS!



Ford EV partner in China faces lawsuit over unpaid bills Electric carmaker Zotye sued by battery supplier as slowdown grips industry


Chinese electric carmaker Zotye, which has a joint venture with Ford in the country, is facing a lawsuit over delayed payments to a supplier as the impact of shrinking vehicle sales ripples across the car industry. Shenzhen-based lithium battery maker Bak Power has filed a civil suit for breach of contract over outstanding payments, seeking to freeze more than Rmb40m ($5.7m) in assets of Zhejiang province-based Zotye Automobile and three subsidiaries, according to a filing on the Shenzhen Longgang District People’s Court website. Zotye confirmed that the case was going ahead but declined to comment on how much it owed to suppliers. The case comes as the Chinese former chief executive of electric car start-up Faraday Future filed for personal bankruptcy in the US, the latest development in what has become a cautionary tale of the risks indebted Chinese companies can bring to their partners.

 Ford and Zotye in 2017 announced that they planned to invest $756m in a 50:50 joint venture to manufacture electric vehicles for the Chinese market. However, Chinese state media have said the partnership is being reconsidered due to the market slump. Ford did not respond to requests for comment. The case against Zotye, which was filed in May, came to light this week as Chinese media debated the authenticity of a leaked bank memo that identified four Chinese electric car companies, including Zotye, as likely to enter bankruptcy proceedings by the end of the year. All four companies denied they were considering filing for liquidation, amid rumours of suspension of business and downsizing. New energy vehicle sales in China fell 34 per cent last month. That was the third consecutive month of decline, fuelling fears of a sharp slowdown that analysts said could hit dozens of electric vehicle companies with crippling and potentially fatal debts.

 A hotspot in the market just four years ago, electric vehicles are now “exacerbating fallout from a weak car market because the R&D costs for carmakers have increased significantly due to investing in EVs”, said Tu Le, of advisory Sino Auto Insights. Recommended Electric vehicles China new energy vehicle sales drop 34% Mr Le said smaller suppliers to electric carmakers would be the first to be hit due to their rapid turnover and the difficulty they face raising capital from banks, leaving lawsuits as their best hope of getting paid. “They want a place in line. If you are the last to sue, it’s harder to get more money back,” he said. Jia Yueting, the founder and former chief executive of Faraday Future, an electric car company with ambitions to take on Tesla, filed for bankruptcy in the US this week and plans to hand over his stake in the company to help repay personal debts in China amounting to about $3.6bn. In 2017, Faraday gave up on plans to build a $1bn factory in Nevada after some of Mr Jia’s assets were frozen and his Chinese technology conglomerate LeEco suffered a cash crunch.

 Mr Jia’s bankruptcy filing would not affect the company’s business operations, Faraday Future said in a statement. Mr Jia has been on a blacklist of individuals who failed to pay their court-mandated debts in China since 2017, when a Beijing court seized millions of dollars worth of his assets.

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