Thanks to the rapid growth of the Chinese electric vehicle market, like a comet Electric vehicle startups that appeared are in the process of exiting토토사이트. While the deficit grew due to low sales volume and high spending, the capital market situation during Corona 19 was not good, and even the investment money dried up. In addition, as price competition among companies intensifies due to the slowdown in the growth of the electric vehicle market, companies with severe financial difficulties are collapsing first. In the industry, large-scale restructuring is just beginning, and there are predictions that up to 70% of electric vehicle companies may close within the next two to three years.
According to the Chinese economic media Jeil Finance and Maeil Business Newspaper on the 19th, Chinese electric car start-up Weima Motors (威馬汽车) is said to have organized all six stores operated in Hainan Province. In March, Shanghai’s Qingpu District Consumer Protection Commission said that Weima’s business condition was not serious, and that consumers should be cautious when purchasing. Currently, it is known that about 2,000 consumers in Hainan Province alone are struggling because they cannot receive after-sales service and parts.
Weima was once called the ‘Four Little Dragons’ of electric vehicles in China along with Wei Lai, Xiaopeng and Byton. Since its establishment in 2015, China’s representative information technology ( IT) companies as well as investment from Hong Kong’s largest conglomerate, Lee Ja-cheong (李嘉誠), chairman of the Cheung Kung Group, who was called ‘Asia’s Warren Buffett’. As of June of last year, it boasted a ransom of 7.04 billion dollars (about 9.35 trillion won) and applied for an initial public offering ( IPO ) on the Hong Kong Stock Exchange. However, from October of the same year, due to sluggish sales and a widening deficit, news of employee wage cuts and management cut in half was reported, and the IPO application was eventually invalidated. Weima did not sell a single electric vehicle in the first quarter of this year.
China’s Weima Motors electric SUV model W6. /Screenshot of Weima Motors website
Weima is not the only place experiencing financial difficulties. Another electric car start-up, Tianji Motors, suffered dissatisfaction in March by lowering employee salaries to the level of the minimum wage as well as suspending production. Aitz Motors (爱驰汽车) had been delayed in wages for two months, and Leiding Motors (雷丁汽车) suffered from over 200 contract disputes and debt default lawsuits, and eventually filed for bankruptcy.
Analysts say that their failure was due to a combination of failures in the domestic market due to lack of a sales strategy and difficulties in financing. An anonymous employee who recently resigned from ITZ said, “In the case of startups that have recently faced a management crisis, including ITZ, they have not been able to capture the momentum for development over the past few years.” There was a problem with product definition and financial flexibility,” he told Jeil Finance. In addition , the fact that large companies such as Tesla and BYD
started to cut prices one after another from this year, and competition became more intense, hastened their exit from the market. Due to low sales and lack of funds, it means that they did not have the stamina to compete. The fact that the capital market has set stricter standards for electric vehicle companies after 2020 has also exacerbated the financial difficulty. Cui Dongshu, secretary-general of China Passenger Car Market News Association ( CPCA ), said, “The complex market situation this year could accelerate the elimination of electric vehicle brands with small sales and lack of funds.” actual CPCA
According to the report, in the first quarter of this year, Aitz sold only 536 units and Tianji sold only 237 units. Ping An Securities said, “High R&D investment and rapidly expanding sales and service channels of new automakers will inevitably continue to depress performance.” necessary,” he analyzed. Considering that the price of each electric car of these startups is 200,000 to 400,000 yuan, it means that they have to sell 200,000 to 400,000 units a year.
There is also a prospect that the restructuring of the electric vehicle industry may begin in earnest due to the global economic downturn and the effect of China’s reopening (resumption of economic activities) that did not meet expectations. “Conservatively speaking, 60 to 70 percent of brands will face consolidation in the next two to three years,” said Hualong Zhu, chairman of China’s Changan Automobile.