Evergrande’s financial problems to affect South Korean battery kit makers

The financial crisis of China’s Evergrande Group is expected to impact the businesses of some South Korean battery equipment makers.

The group formed a subsidiary called Yangzhou Evergrande Neoenergy Technology Development in 2019 to expand into the electric vehicle industry.

This company had signed multiple battery production equipment deals with South Korean companies.

Some of these South Korean firms include Yunsung F&C, Mplus, Youil Energy Tech and Wonik PNE.

These companies are currently manufacturing the equipment Evergrande has ordered but has not yet delivered them, people familiar with the matter said.

Yunsung F&C was planning to supply equipment for the electrode process in battery production.

But the company hasn’t delivered the kits as it is concerned that it may not be paid for them by Evergrande.

Mplus and Youil Energy Tech were planning to supply assembly equipment. In February, Mplus had signed a deal worth 26.3 billion won to supply Neoenergy Technology Development with production equipment. The South Korean company had received 50% of the contract price but is yet to deliver the kits.

A company spokesperson said it had agreed with the Chinese company to delivery the kits after it was paid in full.

Wonik PNE had signed a deal worth 17.3 billion won with Neoenergy Technology Development to supply kilns. A Wonik PNE spokesperson said it was continuing its discussion with Neoenergy Technology Development. The South Korean company is currently manufacturing the equipment.

It remains uncertain whether Evergrande will be able to pull through its current financial problem.

People familiar with the matter said there were rumors that Evergrande was planning to sell Neoenergy Technology Development to another Chinese conglomerate.

However, even if the company liquidates, Evergrande’s electric vehicle business was only starting and relatively smaller compared to other Chinese companies such as CALB, the people said.

Evergrande’s battery research lab, which has some 800 employees, also has multiple former employees of South Korean battery makers LG Energy Solution, SK Innovation and Samsung SDI.