By LIU Jiaxin
Things have gone from bad to slightly better for Chinese EV maker Weltmeister Motor (WM). The company released a statement on Tuesday, stating that its founder and chairman SHEN Hui is no longer on a national credit blacklist.
Can pay, won't pay
In April, a court in Shanghai issued a restriction order on Shen when a former employee sued the company for 14,065 yuan (US$1,940) in unpaid wages and the court found in his favor.
In its statement, WM said the company is continuing to service its debts while planning to export cars just as soon as the assembly line resumes operations, but sources told Securities Times that WM has stopped paying anyone except senior management.
WM reduced the wages of senior executives by 50 percent and others by 30 percent last year to lower costs, but apparently that was not enough.
Founded in 2015 WM was a top-three EV maker until 2019. The company closed 12 financing rounds, raising 30 billion yuan (US$4.4 billion), more than Nio and Li Auto combined before they went public.
The government also was generous. The rent for WM's Shanghai headquarters barely registers. Factories in Zhejiang and Hubei provinces were more or less paid for by local governments.
Decline and fall
In October last year, a large number of WM dealerships began to close down. In November, Jiemian News reported that plants were running at 20 percent capacity. At the beginning of the year, the Wenzhou factory, one of the main production bases for WM, was reported to have stopped production due to a lack of orders.
In February, employees went on a strike and demonstrated in front of a WM factory, accusing the company of not paying their wages. Authorities were forced to intervene.
In March, WM said it planned to reopen over 100 showrooms to start selling and servicing cars "soon." More than half of WM dealerships in Shanghai are closed.
Losing money on every sale
WM had its time. It was the first Chinese EV startup to manufacture cars and has two highly automated factories.
In 2019, WM delivered 16,876 cars, trailing only Nio among Chinese EV makers. Four years is a very long time in the EV business. In 2022, WM didn’t reveal its delivery stats, which can hardly be a good sign. Open data showed WM sales under 30,000.
WM lost 13.6 billion yuan from 2019 to 2021. It currently loses about 100,000 yuan on every car it sells.
Misery loves company
WM is not alone. A good number of EV makers have found themselves in deep water.
Aiways, founded by former China sales chief of Volvo FU Qiang in 2017, is delaying wages. A senior executive of the company allegedly said “bankruptcy is inevitable” and that “all employees should prepare to proceed legal actions.”
In August 2019, Aiways acquired a 50 percent stake in Chinese domestic automaker Jiangling Holdings for 1.8 billion yuan principally to make use of Jiangling's license to produce EVs. In June 2021, Aiways sold its JMH stake to but kept the permits. Since 2020, Aiways has sold only 8,500 cars. Just over 100 have been sold this year.
Enovate, founded in 2015, is facing multiple lawsuits for more than 70 million yuan. Enovate failed to sell a single car in May.
