China Property Developer Eyes Deals in Quest to Dominate Electric Vehicles

(Bloomberg) -- China Evergrande Group, a property developer that has ambitions to dominate the global electric-vehicle industry, has approached two Dutch truck-and-bus makers about possible acquisitions, according to people familiar with the matter.

The group, headed by China’s third-richest man, has reached out to Paccar Inc.’s DAF Trucks NV and closely held bus manufacturer VDL Groep BV, the people said, asking not to be named as the matter is private. It’s still early in the process and there is no guarantee that a deal will be reached, they said. It wasn’t immediately clear how open the Dutch companies are to a sale.

DAF and VDL would provide Evergrande with technology to electrify trucks and buses, while building on Chairman Hui Ka Yan’s recent moves to diversify beyond his real-estate roots. Evergrande has declared it can take on the likes of Tesla Inc. and become the leading EV manufacturer in the world within three to five years.

Based in China’s southern manufacturing belt, China’s second-biggest property developer has stood out for some of its investments in recent years, with Hui leading pushes into everything from soccer clubs to healthcare. In the process, the group’s built up one of China’s biggest piles of debt.

Representatives at Evergrande didn’t respond to requests for comment. Paccar, which bought DAF in 1996, declined to comment. VDL also declined to comment.

VDL, based in Eindhoven, has about 17,000 employees, makes buses and coaches and offers car-assembly services. It had sales of 6 billion euros ($6.7 billion) last year, according to a company statement. DAF, based in the same southern city, builds commercial vehicles including trucks in its facilities in the Netherlands, Belgium, Brazil and the U.K. It has about 8,500 employees, according to its website. The two Dutch companies cooperate in the development of electric trucks.

Both DAF and VDL are pioneers in electrification of commercial vehicles. VDL has been on the forefront of introducing electric buses for public transportation, including in Amsterdam. DAF was one of the first truck manufacturers to introduce a hybrid-electric distribution truck in Europe and has continued the development of hybrid and electric powertrains.

Their technologies could help Evergrande add to its capabilities to seriously challenge industry leaders like Tesla, which has been churning out EVs for years and is expanding its manufacturing presence in China with a factory near Shanghai. Besides Tesla, Evergrande will come up against all the world’s major carmakers, which are plowing tens of billions of dollars into EV production and research. In China, too, hundreds of companies are getting into the EV game.

Evergrande has backed Swedish electric-car maker NEVS AB, which is investing in supercarmaker Koenigsegg. But Hui isn’t the only Chinese tycoon to invest in the European autos space, with billionaire Li Shufu’s Zhejiang Geely Holding Group Co. buying Volvo Cars in 2010 and a top stake in Daimler AG last year.

©2019 Bloomberg L.P.

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