Copyright ©2021 VINAMR All Rights Reserved
14 Oct 2023
Nio lost $35,000 per car sold, and WM Motor just filed for bankruptcy in a court in Shanghai.
The case of WM Motor is the latest example of a young business that rose from promising electric vehicle production but fell into insolvency. Meanwhile, larger “players” are gaining more market share, and people are narrowing their spending when shopping for big-ticket items.
WM Motor – once invested by search giants Baidu and Tencent Holdings – is one of the electric vehicle startups with the best economic foundation in China, alongside Nio, Li Auto and Xpeng. WM Motor raised more than 5.3 billion USD in capital but still not enough to compete in the Chinese electric vehicle market, where car manufacturers are pressed under pressure to launch smart new features and high-end products. level while prices must increasingly decrease.
WM Motor blamed macroeconomic conditions for the failure. The company said it has made efforts to resolve operational troubles due to the pandemic, capital market stagnation, as well as price fluctuations of raw materials.
The impact of the pandemic on the auto industry cannot be completely assessed. Car manufacturers around the world are facing extremely stressful challenges when they have to close factories, break supply chains, increase chip prices and a period of chip shortage. Then came the time when Chinese electric car companies emerged, followed by the car price war originating from Tesla.
In this context, firms with larger pockets and more efficient operations will survive. Firms that are too slow, like WM, cannot earn enough income to compensate for huge losses.
In fact, WM lost a lot of money. The company recorded losses doubling within 3 years, to 1.13 billion USD in 2021.
According to records published on October 9 on China’s bankruptcy information disclosure platform, WM Motor filed for bankruptcy, a month after investment company Apollo Future Mobility Group withdrew from the purchase of WM. for 2.02 billion USD.
However, WM also showed its intention to restructure and introduce strategic investors around the world for “rebirth goals”, according to a status line posted on its Weibo account on October 10.
But Lei Xing – co-host of the podcast China EVs & More and former editor-in-chief of specialist site China Auto Review – says he sees no future for WM.
“Even the leaders – Nio, Xpeng, Li Auto – are not completely out of danger. If you look at the US and Rivian, they all need money. So capital is still a problem for everyone.”, Xing told TechCrunch.
Just a few days ago, Nio said it lost $35,000 per car sold in the second quarter of this year. The company employs 11,000 employees in research and development (R&D), but only sold 8,000 cars per month in the second quarter. Nio has invested heavily in robotic systems at manufacturing plants, providing $350 augmented reality glasses for each car seat and launching a separate phone model to interact with the car’s self-driving system.
Li Auto – which seems to be successful with impressive vehicle deliveries this year – must also be on high alert against a new competitor. Aito – an electric car brand invested in by Huawei – has penetrated very quickly into the smart electric SUV segment – a delicious piece of cake being exploited by Li Auto. Aito received more than 50,000 orders for the M7 model in the first 25 days of sale, placing it in the top 5 best-selling new energy vehicle manufacturers in China, according to August data. The M7 has all the features. from Li Auto’s flagship L7 SUV, but the price is less than 40,000 USD, while the L7 is from 47,000 USD.
There are other examples of the costs Chinese automakers are willing to bear as well as the speed with which they strive to meet and exceed customer expectations.
Around the world, consumers often have the habit of using private cars instead of taking taxis. Ride-sharing service providers such as Uber and Lyft have had to reduce prices, so profits are also affected.
“None of these smart electric vehicle startups are safe, except the state-owned ones. Look at Rising Auto, IM, Voyah. These brands deliver thousands of cars every month. But it’s not enough. I believe you will see some of it gradually disappear,” Xing said.
Over the past year, a series of electric vehicle startups – such as Evergrande, Aiways and Niutron – closed factories or stopped accepting new orders. Byton – once invested in by FAW Group – filed for bankruptcy in June after failing to put its first car model into production.
Car companies like BYD have the ability to overcome difficulties. BYD is also the leading electric vehicle company in China, with more than 1.6 million vehicles sold in the first eight months of this year, according to data from the China Automobile Association (CPCA). Tesla China also sold 390,222 cars in the same period.
“BYD still has other cards to play. They can cut prices when needed, like Tesla, and BYD also has a lower cost base than other competitors, so they can sacrifice profits for volume “, Xing said.
Companies with a large global presence – like Tesla and Geely – can do well because they have survived headwinds in their home markets.
Zeekr – a young brand belonging to Geely with an investment of hundreds of millions of dollars – is an example of eagerness to penetrate the international market with a two-pronged attack strategy. On one side, the company plans to soon sell high-end electric cars in a series of markets across Asia and Europe, on the other side, the company has an agreement with Waymo to provide robotaxi and plans to begin testing in the US from the end of the year.
Thiết kế website bởi Mona Media