The share price of China Evergrande New Energy Vehicle Group Ltd fell by nearly 8%, after state-owned media raised concerns about an investment bubble and noted the company has yet to sell a single car despite its HK$500 billion (US$64 billion) market valuation.

Evergrande’s shares closed on Monday at HK$58.6 on the Hong Kong Stock Exchange, down 7.6%.

The State Administration for Market Regulation recently recalled more than 40,000 vehicles over safety issues, including more than 33,000 new-energy vehicles, Xinhua News Agency noted in its recent report.

The article warned that while new-energy vehicles may be highly sought after in the market, the recent recall reveals that there could be many problems associated with the market craze.

The standards of these vehicles could be exaggerated and technologies commonly seen in the car manufacturing industries have been repackaged as “black technologies,” Xinhua said. It warned about a possible investment bubble in new-energy vehicles and called on authorities to stay alert for signs of market instability.

Xinhua named Evergrande in the article, noting the contrast between the quality of its vehicles and the group’s value.

According to Evergrande’s 2020 annual report, more than 98.79% of its income came from medical cosmetics and health management operations. New-energy vehicles generated just 1.21%.

This is not the first time Evergrande has faced criticism from Beijing. A media outlet under the State Council has claimed that Evergrande seeks to profit by merely selling an image of itself as a maker of new-energy vehicles.

It questioned Evergrande’s level of dedication to the car business, pointing out that only one person on its 10-member management team for new-energy car production has a background in the auto sector.

Evergrande in January signed an agreement with six investors to issue more shares and raise HK$260 million, claiming that the funds raised would be invested in new-energy vehicle research and development, manufacturing and paying off debts.

In mid-March, Evergrande signed an agreement with Beijing Wutong Auto Union Technology, which is under Tencent, to form a joint venture to develop an artificial intelligence smart-car operating system.

Meanwhile, Evergrande’s RV-treasure, an app for online sales of property and vehicles, is considering going public in the United States in the fourth quarter of this year, according to a Bloomberg report.

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