1. In April 2021, the Hongqi S9 supercar debuted at the Shanghai auto show, with Xu Liuping announcing 99 global orders. The car promised over 1,400 horsepower, acceleration from zero to 100 km/h in under two seconds, a top speed above 400 km/h, and a price of $1.45 million. [para. 1][para. 2] FAW and U.S. startup Silk EV planned a 10-billion-yuan ($1.5 billion) investment for research and production facilities in China and Italy. [para. 3] An agreement in Feb 2021 formalized the plan. The venture later hired Walter de Silva and Amedeo Felisa, and won support for a Gavassa factory (roughly 320,000 square meters) expected to create about 1,000 jobs. [para. 10][para. 11][para. 12]
2. Over five years later, the S9 never entered mass production, the Italian factory was never built, and the partnership unraveled into debts, court-ordered liquidations, and arbitration. [para. 4] The failure highlighted the structure's risk: FAW contributed brand rights, not cash, for a minority stake, leaving its partner responsible for most funding. [para. 5] By March 2022, lawmakers questioned the lack of construction; deadlines for land purchases were missed, and 17 employees sought unpaid wages in Aug 2022. [para. 13][para. 14][para. 15] The Italian operator was placed in judicial liquidation in May 2024, and the site was later sold to a Belgian warehouse group. [para. 19][para. 20]
3. FAW's overhaul, led by Xu, lifted Hongqi sales from 33,000 in 2018 to over 300,000 in 2021. [para. 6] Krane, who founded Silk EV in 2018, had no car manufacturing background but had run Emma Entertainment and KraneShares. [para. 7][para. 8][para. 9] Italian authorities investigated a €38 million funding application for suspected fraud and money laundering, though no prosecution followed. [para. 16][para. 17] In Jan 2024, ten ex-employees filed a complaint over €350,000 in unpaid wages; it was withdrawn after payments were made. [para. 18]
4. Silk EV relied heavily on borrowing. Six Chinese banks agreed to support it, but amounts are undisclosed. [para. 21][para. 22] Ideanomics lent $15 million but obtained a $16.4 million judgment after default. [para. 23][para. 24] Two Italian investors provided €5.2 million in convertible debt; after disputes, they won a $6.58 million judgment in 2024. [para. 25][para. 26][para. 27] Krane also took a personal $3.5 million loan at 18% interest, settled only in 2025. [para. 28]
5. Creditors forced the liquidation of two Cayman entities in Dec 2025, appointing FTI Consulting. [para. 29] Assets were booked at $47.27 million, but Krane estimated them almost entirely unrecoverable. [para. 30][para. 31] Under the original plan, Silk EV would contribute 1 billion yuan for 85% of the holding company, while FAW holds 15% via brand rights. [para. 32] FAW participated in governance, reaffirming commitment in Oct 2022, but by early 2024 had initiated Hong Kong arbitration against Silk EV. [para. 33][para. 34][para. 35]
6. Liquidators questioned Krane's claims of $15.9 million in loans, noting he received over $14 million in repayments and one agreement was dated just days after liquidation petitions; complete records were still missing by October, prompting subpoenas for Krane and Citibank. [para. 36][para. 37][para. 38][para. 39] FAW's ultimate exposure is unclear, with potential reputational cost and unresolved ownership of designs; experts advise enforceable funding and exit provisions. [para. 40][para. 41] The S9 is no longer in Hongqi's catalog, Xu left in 2023 and faces an investigation in 2026, while Krane continues to manage KraneShares, calling Chinese assets 'currently undervalued.' [para. 42][para. 43]
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