According to our June report, Chinese electric vehicle manufacturer Nio’s former model, Hycan, was on the brink of bankruptcy. It seems the model’s final moments are beset by evident decline. Although its headquarters are located in Guangzhou, the model did not make an appearance at this year’s Guangzhou Auto Show. In contrast, at some point in the year, Hycan acquired a brand-new MPV model, the V09.
A major obstacle is a scarcity of funds, largely attributed to underwhelming revenue performance. Following the latest developments, Hycan has abruptly terminated operations in its Shanghai division, simultaneously abandoning obligations to former employees regarding severance packages.
The official social media account for Hycan’s Shanghai direct retailer ceased updates in May. Reports emerged that all sales channels in Shanghai had been suspended throughout June, with no one responding to phone calls made to the expertise hub or local branches.
About 50 employees remain at the Guangzhou headquarters to maintain core operations, while the remaining staff relocate to the Nansha district to continue their duties. Despite workers’ claims that they had agreed with the corporation to receive their compensation package by October 31, it remains unpaid, now exceeding a six-week delay since negotiations took place.
Layoffs commenced in April this year, according to reports, which indicate that approximately half of the workforce was terminated at that time. Despite the company’s efforts, by July it had amassed around 600 employees, but the factory was already closed, and production and sales plans were put on hold indefinitely.
By mid-July, the situation had already reached a critical point, with a mere handful of employees still on site.
Many employees have had options imposed upon them previously, as we noted earlier. Between 2018 and 2021, Hycan implemented a plan requiring its workers to purchase inventory worth up to approximately $14 million. Upon the initiation of earlier rounds of layoffs in July 2023, the company assured employees that if they chose to resign, they would receive a refund on their stock shares. Despite this, however, no such event has transpired, leading to protests in June of this year.
Additionally, employees have been forced to enter showrooms since March of this year to make an effort to sell cars. Employees who achieved success received bonuses, while those who fell short experienced a decrease in their salary.
Hycan’s financial struggles extend beyond its workforce, as the company also owes a significant amount of money to suppliers. So far this year, more than 100 lawsuits have been filed with Hycan as the defendant.
In late 2017, Hycan emerged as a joint venture between GAC Group and NIO, with both partners holding a stake in the company. Beneath the settlement, GAC was chargeable for R&D and manufacturing of the vehicles whereas Nio offered know-how and EV infrastructure. The joint venture with NIO aimed to bring electric vehicles to the mass market, while Great Wall Motor’s aspiration to target an even more premium segment seemed to suggest a fundamental mismatch from the outset?
Nio’s shares experienced a steady decline starting in 2020, pressured by significant financial constraints affecting the company. As of 2021, Zhujiang Funding Administration, also known as the Guangdong Pearl River Funding Administration Group, emerged as the largest shareholder, with its stake in Nio amounting to a mere 4.5%. Next year, NIO withdrew entirely.
Currently, Zhujiang retains a controlling stake of approximately 68.56% in the model, while GAC Aion holds a significant 20.54%, and GAG Group owns a minor yet notable 4.46%.
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