The EV Manufacturing Funding Trap: Raising Capital Before Production, Leaving Employees, Retail Investors, and Suppliers Stranded

Who Gets Targeted

Victims fall into three main categories: First, retail investors and shareholders holding Evergrande-related stocks, bonds, or commercial papers, who were lured by narratives of a 'trillion-dollar EV market' and 'Tesla-rivaling' technology, only to be left with nothing after trading suspensions and delistings. Second, employees who were coerced into purchasing internal wealth management products or participating in group fundraising, driven by the false sense of security that 'a company this big cannot fail.' Third, parts suppliers and contractors who, fearing the loss of a major client, continued to supply goods despite mounting unpaid invoices, eventually seeing their cash flows crippled by over 16.4 billion RMB in outstanding payables. All three groups shared the fatal flaw of mistaking 'listed company status, government backing, and grand press conferences' for actual repayment capability.

骗局怎么运作

• Step 1: Packaging a grand narrative. Hosting massive press conferences with slogans like 'Overtaking on a New Track' and 'Becoming the World's Largest EV Maker in Three Years,' showcasing concept cars and performing voice-interaction demos (e.g., playing songs on command). With actual mass production nowhere in sight, the goal is to plant the 'AI EV Leader' persona in the public mind to justify future fundraising.
• Step 2: Land grabbing under the guise of manufacturing. Acquiring industrial land at low prices in various regions under the pretext of building vehicle plants and industrial parks. Many projects are essentially vehicles for securing subsidies and land, with claims of massive investments while actual equipment procurement and production progress lag significantly behind, and the land itself is used as collateral for financing.
• Step 3: Circular capital operations. Using the Hong Kong-listed platform to repeatedly place new shares, issue bonds, and introduce strategic investors (e.g., the announced 500 million USD investment agreement). The narrative of 'imminent mass production and booming orders' is used to prop up the stock price, while funds are diverted to the group's capital pool rather than production lines, creating a 'Story-Funding-More Story' closed loop.
• Step 4: Controlling public opinion and suppressing dissent. Deploying 'internet water armies' to attack critics who point out that the cars are 'fake' or 'models' and that the chassis cannot be filmed at events. Using 'patriotic manufacturing' rhetoric to hijack public sentiment, making it difficult for early investigative media and financial institutions to issue effective risk warnings, thereby delaying the exposure of the crisis.
• Step 5: Draining the supply chain to stay alive. Luring suppliers into fronting costs for inventory with massive purchase orders, while delaying payments through commercial acceptance bills and related-party guarantees. Once the stock price collapses and financing channels close, the 16.4 billion RMB in supplier debt becomes bad debt, effectively offloading the risk onto the supply chain.
• Step 6: Collapse and exit. After the founder is subjected to compulsory measures for suspected illegal activities, strategic investors withdraw, factories shut down, and liabilities exceed assets by nearly 180 times. The Tianjin factory's land, facilities, and equipment enter bankruptcy liquidation, leaving banks, investors, and thousands of suppliers to absorb the multi-billion RMB debt hole.

红旗信号（看到这些快跑）

• 🚩 Press conferences only showcase concept cars and PPTs, refusing to allow media close-up inspections (e.g., blocking chassis photography or independent test drives), with mass production timelines repeatedly missed;
• 🚩 Executives lack automotive industry backgrounds (e.g., a football club manager becoming an auto company president), with a clear mismatch between the core team and manufacturing capabilities;
• 🚩 Financing scale is massive and frequent, but there is a severe imbalance between delivery volume and funding (e.g., only a thousand vehicles delivered in 6 years despite tens of billions in funding);
• 🚩 Land acquisition speed far outpaces factory construction progress, with many sites showing only perimeter walls and foundation stones rather than operational production lines;
• 🚩 Extensive use of commercial papers and related-party guarantees to delay payments to suppliers, with accounts payable reaching abnormal levels;
• 🚩 Abnormally aggressive public relations response to criticism, relying on 'water armies' to flood comments, deleting posts, and using legal threats rather than responding with production and delivery data.

真实案例

• April 2026 financial data disclosure: According to public reports, as of June 30, 2026, Evergrande Auto's total book assets were only about 182 million RMB, with total liabilities reaching 32.722 billion RMB—a debt-to-asset ratio of nearly 180 times. This included 16.283 billion RMB in loans from financial institutions and related parties, and 16.439 billion RMB in trade payables to suppliers, with only 1,429 vehicles delivered in 6 years.
• 2021 'Model Car' controversy: According to public reports, vehicles displayed by Evergrande at a major press conference were suspected of being non-functional models. Media were forbidden from filming the chassis, and the president—a former professional football club manager—gave a performance-style presentation involving voice-activated song requests, sparking widespread skepticism about whether the company was actually manufacturing cars.
• 2023 collapse of strategic investment and investigation of key figures: According to public reports, in August 2023, Evergrande Auto announced a 500 million USD strategic investment agreement with NWTN Group and received 600 million RMB in transition funds. Just one month later, the deal stalled due to debt disputes within the group. In September 2023, core group figures were subjected to compulsory measures for suspected illegal activities, and financing channels were completely shut down.
• December 2025 Tianjin factory bankruptcy liquidation: According to public reports, the Evergrande EV Tianjin factory entered bankruptcy liquidation due to insolvency. The factory's land, buildings, and equipment were listed as liquidation assets to be sold to repay creditors.

Official Stance

• September 2016: The Ministry of Finance and other departments announced the results of a special inspection into EV subsidy fraud, exposing widespread false subsidy declarations and revoking production qualifications for severe offenders while clawing back funds;
• September 2023: Police announced that core figures of the group were subjected to compulsory measures for suspected illegal activities;
• December 2025: The court accepted the bankruptcy liquidation application for the Evergrande EV Tianjin factory, and the land, facilities, and equipment entered judicial disposal procedures;
• January to August 2026: The Cyberspace Administration of China, the Ministry of Public Security, and CCTV's 'Focus Report' repeatedly highlighted online chaos in the automotive industry, exposing the ecosystem of 'water armies' and false propaganda. Shanghai police handled over 270 accounts involved in illegal activities related to car companies.

How to Protect Yourself

• ✅ Before investing in EV stocks or bonds, prioritize checking the ratio of 'Actual Deliveries / Cumulative Financing.' Projects with zero long-term deliveries but massive rolling financing should be avoided;
• ✅ Verify government subsidy receipts and actual factory capacity. Cross-reference 'PPT manufacturing' claims with the Ministry of Industry and Information Technology's (MIIT) vehicle manufacturer access announcements and vehicle insurance registration data;
• ✅ When accepting large orders, suppliers should insist on payment before delivery or require bank guarantees. Refuse to accept listed company commercial papers as the sole payment method and ensure that accounts receivable from a single client do not exceed 30% of total revenue;
• ✅ Employees facing coerced wealth management, fundraising, or mandatory shareholding should consult the 12348 legal hotline and 12333 labor hotline. Do not invest family savings just to keep a job;
• ✅ If you discover cases where land is being acquired under the guise of car manufacturing but no factory is built for a long period, report the idle land and potential subsidy fraud to local natural resources departments and disciplinary inspection commissions.