Evergrande Auto Cuts 60% of Tianjin Factory Staff as Quality Concerns Swirl

The Hengchi 5 model made by the automotive wing of Chinese real estate developer Evergrande opened for sale at the end of October. Recently, however, some Chinese web users have complained that the new car, which carries a price tag of 179,000 yuan ($24,763), is beset with various quality problems.

According to one video blogger, words displayed on the car’s screen overlap with each other, while the brakes have an abnormal noise. The blogger also reported issues with the vehicle’s autonomous driving functions, such as the car suddenly stopping even as the system showed that 12 km remained in cruising range.

Hengchi 5’s problems also reportedly include failed seat ventilation and heating. According to tests conducted by other car owners, while driving in Beijing with an outdoor temperature of 1ºC, the total range in urban areas and expressways was 340.8 km – far less than the officially advertised cruising range of 602 km.

In addition, the L2 auxiliary driving functions of the vehicle have faced various complaints. Consumers have claimed that although these functions can be found in the vehicle settings, they cannot be used. Evergrande Auto will supposedly update these functions through OTA later. In the eyes of some car owners, this is tantamount to delivering semi-finished products.

During a press conference for the Hengchi 5, this model was referred to by company representatives as the best pure electric SUV worth less than 300,000 yuan. The Hengchi 5 started pre-sale on July 6, received more than 37,000 orders on July 20, and achieving nearly 40,000 pre-sale orders on August 6. Since then, Hengchi’s order statistics have been a mystery. Meanwhile, Evergrande Auto has established many exhibition and sales centers in dozens of cities across China.

Now, according to informed sources cited in domestic media Jiemian News, Evergrande Auto’s Tianjin factory is laying off 60% of its employees. Some staff have been interviewed internally, while others will enter a vacation period.

Evergrande’s drawn-out financial crisis is well known. In order to dispel users’ concerns about buying cars, Evergrande Auto introduced an innovative payment method whereby pre-sale deposits and final payments will all be delivered to a special account of local regulators in Tianjin.

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However, Evergrande Auto is facing an increasingly competitive new energy vehicle market in China. After Tesla implemented price reductions for its models in the country, many brands have recently lowered the prices of their own vehicles, including XPeng, Ford and even Mercedes-Benz. Only BYD has increased its product prices by margins of 2,000 to 6,000 yuan.

In October, when Evergrande Auto started delivery, the growth of many electric vehicle brands in China slowed down. Deliveries by NIO, XPeng, Li Auto and Leapmotor, which have been publicly listed, all witnessed month-on-month declines.