Evergrande Auto Receives Administrative Decision and Faces Production Constraints

TapTechNews June 11th news, Evergrande Auto tonight released an announcement stating that it has received a further administrative handling decision notice issued by the relevant local administrative department, and the main contents are as follows:

In accordance with the official letter, the relevant local administrative department believes that based on the failure of the relevant affiliated companies to fulfill the contractual obligations according to the terms of the relevant agreements (mainly including the failure to complete the investment scale, planned production capacity, and annual sales target related to the establishment of the group headquarters, global R & D center, and global production base in the area under the jurisdiction of the relevant local administrative department within the agreed time limit; failure to build the production base and R & D center on schedule and put them into operation and complete the research and development of new energy vehicle models), which has constituted a breach of contract, and judging from the operating conditions of the relevant affiliated companies, the objective of the relevant agreements objectively cannot be achieved. Therefore, a handling decision is made in accordance with the provisions of Chinese laws and regulations such as the Civil Code of the People's Republic of China as follows:

(1) Cancel three of the relevant agreements;

(2) The relevant affiliated companies shall return to the relevant local administrative department the various rewards and subsidies totaling approximately RMB 1.9 billion that have been issued within 15 days from the date of receiving the administrative decision notice.

The relevant affiliated companies can apply for administrative reconsideration to the municipal people's government in the relevant place within 60 days from the date of receiving the administrative decision notice, or file an administrative lawsuit with the railway transportation court in this city within 6 months from the date of receiving the administrative decision notice.

TapTechNews noted that Evergrande Auto also announced that its affiliated company, Evergrande New Energy Vehicle (Tianjin) Co., Ltd. („Tianjin Evergrande‟) has recently received a notice from another relevant department.

According to the notice, after the department checked the maintenance situation of the new energy passenger vehicle product production access conditions of Tianjin Evergrande, it put forward three problems that need to be rectified and proposed to order Tianjin Evergrande to stop the production and sale of new energy passenger vehicle products and carry out rectification. During the rectification period, the department will suspend accepting the new product declaration of new energy passenger vehicles of Tianjin Evergrande and the electronic information transmission of the product certificate of new energy passenger vehicles, and will resume it after the rectification is completed and passes the review to meet the production access conditions. If there are any objections, Tianjin Evergrande can submit appeal materials to the department within five working days from the date of receiving the notice.

Evergrande Auto stated that the company attaches great importance to the verification work of the Tianjin Evergrande by the department and actively rectifies the problems after the verification. The company intends to submit appeal and rectification materials to the department before the above deadline. The above proposed handling opinions, if finally officially implemented, will have a significant impact on the company's operating situation.

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