Shares of China Evergrande Group’s electric-car unit plunged as much as 23% in early trade Friday after Bloomberg reported the company missed salary payments to some of its employees and has fallen behind on paying a number of suppliers for factory equipment.
The drop for Hong Kong-listed China Evergrande New Energy Vehicle Group Ltd. Is the most in more than a week. Its parent, whose stock was down 3.8% Friday, has had a tumultuous few months, culminating in financial regulators in Beijing encouraging the embattled developer to take all measures possible to avoid a near-term default on its dollar-denominated bonds.
Evergrande NEV’s cash flow difficulties mean it will likely miss its target to start mass deliveries next year considering trial production of electric vehicles at its factories in Shanghai and Guangzhou has been dialed back, people familiar with the matter said Thursday.
The financial stress of Evergrande’s parent has reached epic proportions, prompting some to describe the potential contagion as China’s Lehman moment considering risks associated with Evergrande are threatening to freeze global credit markets.
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