(Yicai) March 27 -- Guangzhou Automobile Group has rebutted an online rumor that a unit it set up recently to launch a luxury marque with Huawei Technologies plans to buy the factory of China Evergrande New Energy Vehicle Group in the Nansha district of the carmaker’s home city.

Neither GAC nor Huawang Automotive Technology Guangzhou, the new subsidiary, have had any form of contact with Evergrande NEV or any other party about acquiring the Nansha plant, the Guangzhou-based carmaker announced yesterday.

An investor who writes about investment topics posted on Weibo yesterday that GAC and Huawei set up Huawang Auto in Nansha to take over Evergrande NEV's “troubled Hengchi project” and its local factory. The blogger also included a screenshot of a March 20 notice from the district authorities on the formation of the wholly-owned unit, in partnership with Huawei, two days prior.

"Huawang Auto will prioritize utilizing GAC's existing production capacity," GAC told Yicai, while sources close to the matter said that the unit operates on an asset-lite business model.

Huawang Auto will leverage Huawei's experiences in integrated product development, marketing, and sales systems to establish a new business development model that spans product definition, marketing, and ecosystem services, GAC noted.

Evergrande NEV, the electric vehicle arm of struggling property developer China Evergrande Group, said last July that creditors had made a bankruptcy and restructuring application to a local court for the main company that operates its Nansha factory. Built in 2020 and not yet operational, the factory has yet to secure licensing for vehicle production.

Evergrande NEV cannot find a strategic investor or buyer to help alleviate its liquidity issues, the company said last month. Due to its inability to pay on-site audit fees and other advisor costs, the firm delayed the release of its annual financial report and requested a trading halt for its Hong Kong-listed stock from April 1.

Shares of Evergrande NEV [HKG: 0708] plunged 29 percent today to end at 15 Hong Kong cents (2 US cents) each. The stock closed 75 percent higher yesterday.

GAC invested CNY1.5 billion (USD206.7 million) to set up Huawang Auto, according to the district notice. The unit's business scope includes NEV sales, car parts and components manufacture, and sales of NEV production testing equipment.

The new firm will soon release its first premium smart car model, the notice added. Priced at around CNY300,000 (USD41,335), it will be equipped with Huawei's smart auto solutions, including for driving, cockpit, and vehicle controls.

Editor: Martin Kadiev