The once soaring electric vehicle unit of the China Evergrande Group warned that it was facing a “serious lack of funds” and may not be able to meet its financial obligations, adding to the challenges for its heavily indebted parent company. p>

In a filing late Friday in Hong Kong, China Evergrande New Energy Vehicle Group Ltd. The electric vehicle maker said there had been no significant progress in resuming projects that had previously stalled due to payment delays.

Evergrande Auto said it was still speaking to new investors about potential investments in the group and negotiating the sale of some projects and assets in China and abroad. But it warned that it would have trouble paying salaries and other expenses if it couldn’t close a deal soon.

“Given the difficulties, challenges and uncertainties in improving liquidity noted above, there is no guarantee that the Group will be able to meet its financial obligations under the related contracts,” said Evergrande Auto.

China Evergrande Chairman Hui Ka Yan set out to overtake Tesla Inc., local rival NIO Inc. and other big players to build the world’s largest and most powerful electric vehicle manufacturer by 2025, with market capitalization reaching 87 early in the year Billion dollars. But the stock has since crashed, down 93% so far this year.

The parent company, Evergrande, headquartered in Shenzhen, is the world’s most heavily indebted real estate developer and China’s largest junk-rated bond issuer with roughly $ 19 billion in publicly traded dollar bonds. The prices of these bonds have fallen well below par, reflecting investor pessimism about Evergrande’s ability to repay its debt.

Investors who own some of the company’s U.S. dollar bonds hadn’t received an interest payment from the real estate giant as of Thursday, people familiar with the matter said. Failure to pay Evergrande within a 30-day grace period would create what could be the largest dollar bond default of any company in Asia.

Evergrande has attempted to raise cash through the sale of shares in Evergrande Auto and other subsidiaries, as well as the possible sale of its Hong Kong office building. In May Evergrande sold a 2.66% stake in the EV unit for the equivalent of around 1.36 billion US dollars, reducing its stake to just under 65%.

In Evergrande Auto’s half-year results in August, the auto company said its board of directors believed it had enough working capital to meet its financial commitments over the next 12 months. Evergrande Auto, based in Guangzhou, also operates various healthcare companies.

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