Chinese electric vehicle company Weilai (NIO, Nio) has started to cut 2,700 workers, local media Fengpai Shimbun reported today (5th).
According to reports, Chairman Levin Weirai announced a restructuring plan to reduce the workforce by 10% in an internal letter sent on the 3rd.
Wei Lai’s total workforce is 27,000, with 2,700 job cuts under restructuring.
The restructuring is expected to be completed this month.
Wei Lai is one of China’s leading electric vehicle startups.
Sales were 16,704 units last month, up 60% year-on-year, and cumulative sales were 126,000 units in the first 10 months of this year, up 36.3% year-on-year.
However, until October, cumulative sales remained at half of this year’s target of 250,000 units set by Wei Lai.
“The next two years will be the fiercest competition of the automotive industry transformation period, and the external environment is full of huge uncertainty,” Levein said in the letter, comparing the situation facing the company to a “marathon in the mud path.”
Local media pointed out that Wei Lai’s sense of crisis is not just a problem for the company, but also a problem for the entire Chinese new energy vehicle (electric vehicle, hybrid vehicle, hydrogen vehicle) industry.
Although it has grown rapidly with active support from the authorities, the structure of survival of the fittest, which accounts for 80% of sales by the top 10 companies, is that the new energy car market is no longer a blue ocean (promising market due to lack of competitors), and companies that are behind in technology will be eliminated without mercy.
A case in point is the fall of which was once noted as the favorite of the Chinese electric vehicle industry.
Weima started with 6 billion yuan (about 1.08 trillion won) in registered capital and launched its first mass production model, EX5, in December 2017 to produce 16,800 units the following year, becoming the second-largest emerging electric vehicle company in China.
It seemed to be on the path of success, raising 35 billion yuan (about 6.3 trillion won) in investment from Baidu and Shanghai Motors.
However, sales shrank to 712 in the first quarter of this year due to competition with existing auto industry powerhouses such as BYD , and after suffering from severe management difficulties, it eventually filed for bankruptcy with the court on the 9th of last month.
Chairman Sun Hui, the founder, left for the U.S. at the time of filing for Weima bankruptcy, sparking controversy over his escape from abroad.
Earlier, electric vehicle startup Aichi Motors stopped operating its plant in February amid months of overdue wages, and Tenge Motors also announced in March that it would suspend some businesses.
Xiaofeng, which has emerged as a promising Chinese electric vehicle company, is also tightening its belt by dismissing 12 senior executives and dismantling its battery research and development team.
The automobile industry predicted, “The Chinese electric vehicle market has entered a tournament-style competition system in which only winners survive,” adding, “Only a few companies will survive, and the rest will disappear from the market.”
JULIE KIM
US ASIA JOURNAL
