Home » The future of Xi’s hypercars in Italy is at risk. Here’s why

The future of Xi’s hypercars in Italy is at risk. Here’s why

Hongqi CHina hypercar
The Silk-FAW mega-plant, slated to begin operations soon, has missed several deadlines. Prosecutors are now moving to investigate, following a series of complaints

Hitting legal obstacles. After missing four payslips, 17 workers are threatening legal action. The public prosecutor’s office in Reggio Emilia has opened an investigation into tax offences, plus three months of unpaid rent. These are the most recent episodes in the Silk-FAW saga.

  • The joint venture is supposed to build a massive production plant for electric luxury cars, hire a thousand workers and give a new boost to the Aemilian Motor Valley. But the latest reports hint at rising difficulties.

Sino-American hypercars? The project began in May 2021 – three months after US engineering firm Silk EV and the Chinese engineering brand Faw signed an agreement and two years after Italy joined the Chinese Silk Road.

  • In spring 2021, Silk-FAW announced it would build a 320,000-square metres factory. The factory, on paper, should guarantee 1,000 jobs and € 1 billion of satellite activity to produce 100 hypercars a year (priced at € 2 million each) starting from 2023.
    • The first model would have been the S9, a 1,400-horsepower hybrid supercar under the Hongqi brand, which is a symbol of the Chinese Communist Party.

Now, however, judges intend to clear up the suspicions that have arisen because of the missed payments, which have raised several eyebrows across the board.

  • According to il Resto del Carlino, complaints by members of the League and Brothers of Italy prompted the prosecutor’s investigation.
  • La Verità revealed that the matter had attracted the attention of the Bank of Italy’s Financial Intelligence Unit, which had received reports of suspicious transactions.

Unfinished business. In May, regional President Stefano Bonaccini warned Silk-Faw and its partners to “show that they can go ahead as they have promised. Everything is not yet in place, and we haven’t disbursed a single euro from public funds yet. In July, Reggio Emilia’s councillor for economic development, Vincenzo Colla, summoned Silk-FAW’s managers. But no progress has been made.

  • The company had confirmed the purchase of a piece of land. The deed was meant to be signed on August 5, and September 5 should have marked the start of the operation, it said in a note. But the deed was postponed due to “a slowdown in the monetary transfer procedures” caused by “the geopolitical situation arisen in the last few days between the US and China.”
  • Silk-Faw also allegedly failed to pay three months’ rent for the Tecnopolo premises, where managers and engineers had settled to work on developing electric supercars.

Trade unions are losing patience, too. “We cannot wait any longer,” warned Italy’s biggest labour unions, CGIL, CSIL and UIL. “We are certainly worried about the workers who are already committed [to the project],” said a CGIL representative to il Corriere di Bologna, “but we are especially worried about the betrayed promise.

  • “Commitments, people, and investments are at stake. Let’s see if the building site will really start in mid-September […] the whole affair has become surreal,” he said, adding that it’s “unacceptable” for the political world to fail in enforcing the commitments underpinning such foreign investments.

And managers have been leaving the project, including Amedeo Felisa and Roberto Fedeli (who went to Aston Martin), Paolo Gabrielli (Technogym) and Theo Janssen (Ferrari), as reported by Il Fatto Quotidiano, which wrote of “insistent rumours of alleged friction” between Jonathan Krane, the American financier and founder of Silk-FAW, and his new Chinese partners.

  • There’s a precedent. Sabrina Pignedoli, MEP with the Five Stars Movement, noted that FAW had launched a failed project in Germany in 2016, which foundered in 2019, resulting in 1,500 redundancies. She pressed the European Commission to verify “compliance with European regulations on Chinese financing for the plant.”
    • In fact, “the operation is financed, through a company based in the Cayman Islands tax haven, with € 15 million from US Ideanomics,” which is already in the crosshairs of SEC investigations.

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