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China Evergrande Group’s once-highflying electric-vehicle unit warned it was facing a “serious shortage of funds" and might not be able to meet its financial obligations, adding to the challenges facing its heavily indebted parent company.

In a filing late Friday in Hong Kong, China Evergrande New Energy Vehicle Group Ltd., or Evergrande Auto, also said that it had stopped paying some operating expenses, and that some companies had stopped providing it with supplies. The EV maker said there hadn’t been material progress on restarting projects that had previously stalled because of payment delays.

Evergrande Auto said it is still talking to new investors about potentially investing in the group, and is negotiating about selling some projects and assets in China and abroad. But it warned that if it couldn’t strike a deal soon, it would struggle to pay salaries and other expenses.

“In view of the difficulties, challenges and uncertainties in improving its liquidity as mentioned above, there is no guarantee that the group will be able to meet its financial obligations under the relevant contracts," Evergrande Auto said.

China Evergrande Chairman Hui Ka Yan had set out to overtake Tesla Inc., local rival NIO Inc. and other big players to build the world’s largest and most powerful EV maker by 2025. For a while, investors bought into the vision, with Evergrande Auto’s market capitalization hitting $87 billion earlier this year. But the stock has since crashed, and is now down about 93% so far this year.

The parent company, Shenzhen-based Evergrande, is the world’s most indebted real-estate developer and China’s largest issuer of junk-rated debt, with around $19 billion of publicly traded dollar bonds outstanding. Prices of those bonds have fallen far below face value, reflecting investors’ pessimism about Evergrande’s ability to repay its debts.

Investors who own some of the group’s U.S. dollar bonds hadn’t received an interest payment from the property giant by Thursday’s deadline, people familiar with the matter have said. If Evergrande doesn’t pay within a 30-day grace period, that would set the stage for what could be the largest-ever dollar-bond default by a company in Asia.

Evergrande has sought to raise cash by selling shares in Evergrande Auto and other subsidiaries, as well as by potentially selling its Hong Kong office building. In May, Evergrande sold a 2.66% stake in the EV unit for the equivalent of about $1.36 billion, trimming its holding to just under 65%.

In Evergrande Auto’s first-half results in August, the car company had said its board believed it had enough working capital to meet financial obligations over the coming 12 months. Evergrande Auto, which is based in Guangzhou, also operates various healthcare businesses.

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