(Yicai) June 27 -- Shares in China Evergrande New Energy Vehicle Group plunged as much as 8.1 percent today after the electric car arm of struggling property developer China Evergrande Group warned that an equity sale that would have given it a much-needed liquidity boost might not go ahead.

Evergrande NEV’s share price [HKG:0708] was trading down 3.5 percent at HKD0.41 (USD0.05) as of 2 p.m. Earlier in the day it sank to HKD0.39.

The sellers, the buyer and Evergrande NEV have yet to reach an agreement and the sale might not proceed, the Guangzhou-based company said yesterday. And the buyer and the carmaker have also not agreed on the terms of credit.

Last month, liquidators of the electric vehicle startup’s parent company found a potential buyer for a stake in the EV maker.

Shareholders China Evergrande, Evergrande Health Industry Holding and Acelin Global have entered into a non-binding agreement with a possible buyer to sell a 29 percent stake in Evergrande NEV, China Evergrande said on May 26. The carmaker applied to the Hong Kong bourse for trading to resume after a five-day pause on May 27.

As part of the agreement, the buyer would extend a line of credit to fund Evergrande NEV’s operations and its EV business development.

Should the buyer pull out, it would be a further blow to the embattled carmaker, which was forced to halt production in April last year due to a lack of funds. As of Dec. 31, 2023, only 1,700 Hengchi 5 autos had rolled off the production line at its Tianjin factory, and it had only delivered 1,389 units. The factory has been shuttered since early this year.

Evergrande NEV was offered a lifeline in August last year by United Arab Emirates green mobility solution provider NWTN which agreed to invest HKD3.9 billion (USD500 million) in Evergrande NEV in return for a 27.5 percent stake. NWTN also would have provided CNY600 million in interest-free transitional funds.

But Evergrande NEV lost out on this deal as it was unable to meet the preconditions. The offer was dependent on China Evergrande completing its debt restructuring and other conditions. But China Evergrande was unable to do so within the required time period and in January was slapped with a winding up petition from the Hong Kong High Court.

Evergrande NEV is in dire straits. The firm had racked up losses of CNY110 billion (USD15.2 billion) as of the end of last year, CNY12 billion (USD1.7 billion) of which was squandered in 2023, according to its latest financial report. And it only had CNY129 million (USD17.7 million) left in its bank accounts.

As of the end of last year, Evergrande NEV had assets of CNY34.9 billion (USD4.8 billion) and liabilities of CNY72.5 billion, a third of which were loans.

Editor: Kim Taylor