GUANGZHOU -- Real estate developer China Evergrande Group will purchase a majority stake in automaker National Electric Vehicle Sweden for $930 million as it steps up its diversification into the green-car field.
Subsidiary Evergrande Health Industry Group will purchase 51% of the Sweden-based carmaker from third-party holding company Kerryman Holdings by the end of the month.
After years of rapid growth, Evergrande's real estate business is facing serious challenges in rising financing costs, a slowing domestic economy and a lackluster property market. With sales slowing, the company is placing bets on a range of sectors to foster new revenue sources, including new-energy vehicles.
National Electric Vehicle, which acquired core assets and intellectual property rights of Saab Automobile AB in 2012, owns facilities in Sweden as well as in the Chinese city of Tianjin. The company also plans to build another plant in Shanghai, aiming to more than quadruple its annual production capacity to 220,000 units from around 50,000.
But upfront investments have weighed on its earnings. For 2017, the carmaker logged a net loss of 996 million Swedish krona ($111 million) on sales of roughly 34 million krona.
Last June, Evergrande Health acquired a 45% stake in electric car startup Faraday Future for 6.7 billion Hong Kong dollars ($854 million).
Mainland China's new-energy vehicle market is growing rapidly thanks to support from government subsidies. Sales of such vehicles, which include hybrids, are projected to climb almost 30% this year to 1.6 million units, after surging 62% last year to about 1.25 million. But with competition intensifying as new players rush onto the scene, Evergrande could face a bumpy road here as well.