Chinese electric-vehicle maker WM Motor said a Shanghai court has accepted a so-called pre-restructuring application by the company, which is mired in financial difficulty and collapsing sales.
(Bloomberg) — Chinese electric-vehicle maker WM Motor said a Shanghai court has accepted a so-called pre-restructuring application by the company, which is mired in financial difficulty and collapsing sales.
In a statement Tuesday, WM Motor said it will adjust corporate strategy and keep communicating with relevant parties to resolve its financial and debt problems. On Monday, WM Motor was mentioned in a notice on China’s national enterprise bankruptcy information disclosure platform.
Just a month ago, Hong Kong-listed Apollo Future Mobility Group Ltd. walked away from a deal to buy the company for $2.02 billion, citing financial market uncertainty and China’s uneven economic recovery.
WM Motor said Tuesday that it was suffering “short-term operating difficulties” due to factors including the sluggish capital market, sharp fluctuations in raw material prices and setbacks in getting funding. The company said it aims to avoid bankruptcy through restructuring.
Its difficulties reflect the boom-and-bust cycle among smaller players vying it out in China, the world’s biggest EV market, where BYD Co. now accounts for about one-third of all new energy vehicle sales, pushing the likes of WM Motor to the sidelines.
WM Motor sold about 35,000 electric sport utility vehicles in 2021 and a similar number last year, data from the China Automotive Technology and Research Center show. In the first eight months of this year, it sold only 1,387 cars.
It’s a sharp reversal for the company founded in 2015 by Freeman Shen, a former chief executive officer of Zhejiang Geely Holding Group Co.. At one point, WM Motor was regarded as one of the most promising Chinese EV startups, backed by Baidu Inc. and Tencent Holdings Ltd., setting delivery records and considering a listing on China’s answer to the Nasdaq.
WM Motor had planned to launch its latest M7 EV in 2023, which would have put five of its models on the market, but that didn’t happen. Instead it laid off employees, suspended factory production and cut back on aftersales services.
China’s EV market is rapidly evolving, with about 100 manufacturers churning out pure-electric and plug-in hybrid models, down from around 500 registered makers in 2019, when government subsidies turbocharged the industry.
Deliveries of Chinese-made EVs and plug-in hybrids hit a record high of 716,000 units in August, according to the China Passenger Car Association, with the bulk coming from heavy hitters like BYD and Tesla Inc.
Elon Musk’s automaker launched a fierce price war in China about a year ago that has cut into manufacturers’ margins.
Some Chinese EV startups are trying to shore up funds. Nio Inc., which has yet to make profit but aims to double sales to 250,000 EVs this year, has sold a 7% stake to an entity controlled by Abu Dhabi for about $740 million and is considering raising another $3 billion in the Middle East and locally. Xpeng Inc. secured a $700 million investment from Volkswagen AG over the summer.
(Updates with statement from WM Motor. An earlier version of this story corrected the date of the filing.)
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