<p>Embattled Chinese property developer Evergrande Group is in talks with smartphone maker Xiaomi and Shenzhen state-backed investment firms as it looks to sell part of a 65 per cent stake in its electric vehicle (EV) unit, three sources said.</p>.<p>The Evergrande New Energy Vehicle (NEV) Group had a market capitalisation of $12.5 billion on Thursday and one of the sources said the consortium is looking to buy a significant minority stake.</p>.<p>Evergrande said in a statement on Friday that its unit, Evergrande NEV, had held preliminary talks with Xiaomi regarding it coming on as a strategic shareholder, although there was no in-depth discussions.</p>.<p>Xiaomi and Shenzhen's state asset regulator did not respond to requests for comment.</p>.<p>The talks were said by the sources to be at an early stage and subject to changes.</p>.<p>The developer said last week that it was in discussions with several independent third-party investors on the proposed sale of certain assets, including stakes in Evergrande NEV, as part of its efforts to reduce its debt.</p>.<p>Smartphone maker Xiaomi has been ramping up investments in EV suppliers after it unveiled its EV ambition with an investment of $10 billion in March, following its peers from Apple Inc to Huawei Technologies Co as they bet on more cars becoming battery-powered and smart.</p>.<p>The potential deal would give Xiaomi EV production facilities to push forward its auto business, the sources said.</p>.<p><strong>Debt Warning</strong></p>.<p>Evergrande has been struggling to raise funds to pay its debts after Beijing stepped up curbs on the real estate sector to contain the risks of a bubble.</p>.<p>China's central bank, banking and insurance regulator said they had summoned executives of Evergrande to a meeting on Thursday and issued a rare warning that the company ought to reduce its debt risks and prioritise stability.</p>.<p>Investors have been worried about Evergrande's financial health and the potential systemic financial risk it poses.</p>.<p>Concerns about Evergrande intensified after it failed in June https://www.reuters.com/world/asia-pacific/sp-global-downgrades-china-evergrande-subsidiaries-2021-08-06 to pay some commercial paper on time. A Chinese court froze a $20 million bank deposit held by the firm on the request of China Guangfa Bank last month.</p>.<p>In May, the developer put a 2.66 per cent stake in Evergrande NEV on sale at a 20 per cent discount to raise about HK$10.6 billion ($1.36 billion).</p>.<p>Evergrande NEV warned of a 4.8 billion yuan ($739.67 million) net loss for the first half of 2021, according to its filing with the Hong Kong Stock Exchange, nearly double the loss a year ago.</p>.<p>The company unveiled nine EV models under the brand Hengchi at the Shanghai Auto Show earlier this year, vowing to start mass production and delivery from next year.</p>.<p>It has built three manufacturing bases located in Guangzhou, Shanghai and Tianjin, and acquired a production permit for electric passenger vehicles by taking the controlling stake in NEVS AB in 2019.</p>.<p>Sales of new energy vehicles, including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to make up 20 per cent of China's overall annual auto sales by 2025.</p>
<p>Embattled Chinese property developer Evergrande Group is in talks with smartphone maker Xiaomi and Shenzhen state-backed investment firms as it looks to sell part of a 65 per cent stake in its electric vehicle (EV) unit, three sources said.</p>.<p>The Evergrande New Energy Vehicle (NEV) Group had a market capitalisation of $12.5 billion on Thursday and one of the sources said the consortium is looking to buy a significant minority stake.</p>.<p>Evergrande said in a statement on Friday that its unit, Evergrande NEV, had held preliminary talks with Xiaomi regarding it coming on as a strategic shareholder, although there was no in-depth discussions.</p>.<p>Xiaomi and Shenzhen's state asset regulator did not respond to requests for comment.</p>.<p>The talks were said by the sources to be at an early stage and subject to changes.</p>.<p>The developer said last week that it was in discussions with several independent third-party investors on the proposed sale of certain assets, including stakes in Evergrande NEV, as part of its efforts to reduce its debt.</p>.<p>Smartphone maker Xiaomi has been ramping up investments in EV suppliers after it unveiled its EV ambition with an investment of $10 billion in March, following its peers from Apple Inc to Huawei Technologies Co as they bet on more cars becoming battery-powered and smart.</p>.<p>The potential deal would give Xiaomi EV production facilities to push forward its auto business, the sources said.</p>.<p><strong>Debt Warning</strong></p>.<p>Evergrande has been struggling to raise funds to pay its debts after Beijing stepped up curbs on the real estate sector to contain the risks of a bubble.</p>.<p>China's central bank, banking and insurance regulator said they had summoned executives of Evergrande to a meeting on Thursday and issued a rare warning that the company ought to reduce its debt risks and prioritise stability.</p>.<p>Investors have been worried about Evergrande's financial health and the potential systemic financial risk it poses.</p>.<p>Concerns about Evergrande intensified after it failed in June https://www.reuters.com/world/asia-pacific/sp-global-downgrades-china-evergrande-subsidiaries-2021-08-06 to pay some commercial paper on time. A Chinese court froze a $20 million bank deposit held by the firm on the request of China Guangfa Bank last month.</p>.<p>In May, the developer put a 2.66 per cent stake in Evergrande NEV on sale at a 20 per cent discount to raise about HK$10.6 billion ($1.36 billion).</p>.<p>Evergrande NEV warned of a 4.8 billion yuan ($739.67 million) net loss for the first half of 2021, according to its filing with the Hong Kong Stock Exchange, nearly double the loss a year ago.</p>.<p>The company unveiled nine EV models under the brand Hengchi at the Shanghai Auto Show earlier this year, vowing to start mass production and delivery from next year.</p>.<p>It has built three manufacturing bases located in Guangzhou, Shanghai and Tianjin, and acquired a production permit for electric passenger vehicles by taking the controlling stake in NEVS AB in 2019.</p>.<p>Sales of new energy vehicles, including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to make up 20 per cent of China's overall annual auto sales by 2025.</p>