(Yicai Global) July 7 -- As the electric car division of China Evergrande Group finally approaches mass production after years of delays and has started to accept preorders for its first new energy vehicle, there is hope that the distressed Chinese real estate developer can at last turn a corner.

China Evergrande New Energy Auto Group started accepting bookings for the Hengchi 5 yesterday and deliveries will begin in October, it said. The firm intends to ship 10,000 units of the compact sports utility vehicle by the first quarter next year.

Powered by a Contemporary Amperex Technology battery with a range of 602 kilometers, the Hengchi 5 is available for a reasonable CNY200,000 (USD29,845). The presales price has been set at CNY179,000 (USD26,712).

The start of preorders is a key step towards fulfilling the business diversification aims of China Evergrande amid a cooling property market, real estate analyst Yan Yuejing told Yicai Global. No matter how many cars are sold, it will bring in much-needed cash.

To dispel any concerns about the viability of the heavily indebted firm and its parent, all payments will be directed to a third-party notary account in Tianjin for safekeeping, Evergrande NEV President Liu Yongzhuo said at the launch event yesterday. Should the customer decide not to buy the car or wish to return it within 15 days of collection, the money will be fully refunded.

This unique payment mode is to protect customers' funds, Liu said.

The Hengchi 5 has been a long time in the coming. Evergrande NEV unveiled six prototypes in August 2020 and the following year said it planned to shift over one million units by 2025 and five million by 2035. However, its plans went awry when China Evergrande became engulfed in a huge financial crisis with debts of around CNY2 trillion (USD313.3 billion) and was no longer able to assist.

With no source of income and taking into account the immense sums needed to make electric cars, it was unclear if the Hengchi 5 would ever see the light of day.

With mass production finally on the horizon, Evergrande NEV’s fortunes should change. The Guangzhou-based firm’s deficit nearly doubled in the first half last year from the same period the year before to CNY4.8 billion (USD746 million) on revenue of just CNY37 million (USD5.7 million). Between 2018 and the first half of 2021, it amassed debts of CNY18.8 billion.

Trading of Evergrande NEV’s stock has been suspended on the Hong Kong stock exchange since April 1, after the auto manufacturer failed to submit its 2021 financial report on time due to a probe into a CNY13.4 billion (USD1.9 billion) security deposit being held by sister company Evergrande Property Services Group.

China Evergrande invested CNY47.4 billion (USD7 billion) in its electric car business between 2018 to March last year, the NEV arm said in March last year. Almost half of this went on research and development as well as the acquisition of core technologies. CNY22.5 billion was spent on building plants and purchasing equipment and parts.

Editors: Tang Shihua, Kim Taylor