The Chinese company National Electric Vehicle Sweden (NEVS) - which restarted production of the Saab 9-3 in Trollhattan, Sweden, last year after acquiring the bankrupt car maker - confirmed overnight a "short-term cash problem" meant it needed to temporarily idle its operations.
“The root cause of the current situation is that NEVS’ shareholder, Qingbo Investment Co. Ltd, has not fulfilled their contractual obligation to finance the operations,” the company said in a statement.
NEVS will introduce a number of short-term cost-cutting measures to combat the funding shortage, including pausing Saab production, which currently operates at a rate of six cars per day, and reducing the number of hired consultants it employs.
NEVS’ main owner, National Modern Energy Holdings Ltd (NME), has been the sole financier of the company since the beginning of the year, though has not been able to capitalise its assets in China as quickly as it needed to support it.
“This has resulted in a time lag between the financing from China and the need of cash to pay suppliers,” the statement explains.
NME has transferred over three billion Swedish Krona ($490 million) to NEVS so far and made other large investments in China in a new battery factory and technology development centre.
NEVS is counting on its Saab EV, which is destined to enter production and launch in China this year, to revive the brand and make it a niche but profitable business.
“It is important to state that the assets are significantly higher than the debt but NEVS is planning to use short-term credits to cover all outstanding and near term obligations until the long-term financing is secured. This bridge solution is planned to be realised within a near future," the company statement read.
“The long-term perspective of NEVS remains very exciting and promising.”