National Electric Vehicle Sweden halts production while it sorts out financing
21 May 2014
National Electric Vehicle Sweden (NEVS), the company resurrecting the Saab brand (earlier post), has halted production of its vehicles (currently at 6 units per day) while it sorts through financing issues and aligns its strategy with new OEM partners. NEVS also cut back on its hired consultants.
The company said it is preparing an extensive investment to develop a new platform on the Phoenix architecture—the base for future car models. This development will be done in cooperation with other global OEMs. These collaborations involve sharing cost of development and reduced costs of components through significantly higher volumes.
NEVS recently signed a frame agreement with a major international automotive OEM regarding the cooperation in product development of the future platform. A negotiation with another major automotive OEM is also taking place regarding part ownership. The objective is to add significant resources to the development of Saab as a global premium car brand name. The partnerships will contribute to secure NEVS with the right financial and technical support to develop new products and distribution of cars on a global basis.
However, NEVS is experiencing a short-term cash problem, the root of which is that shareholder Qingbo Investment Co. Ltd, has not fulfilled its contractual obligation to finance the operations, NEVS said.
As a consequence NEVS’ main owner, National Modern energy Holdings Ltd. (NME), has since the beginning of the year decided to enter into the position as the sole financier of the company.
Recently NME concluded that it has not been possible to capitalize its assets in China as fast as needed to support NEVS. This has resulted in a time lag between the financing from China and the need of cash to pay suppliers. As of today NME has transferred more than 3 Billion SEK (US$455 million) to NEVS and made additionally large investments in China, i.e. in the new battery factory and the technology development center.
Assets are significantly higher than the debt; however, NEVS says it is planning to use short-term credits to cover all outstanding and near term obligations until the long-term financing is secured. This bridge solution is planned to be realized within a near future, the company said.
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