According to a May 12 report by Kuai Know-how, Toyota is purportedly weighing an acquisition of financially troubled Chinese electric vehicle manufacturer Neta Auto. Although unsubstantiated, a potential acquisition could help Toyota bolster its electric vehicle capabilities in China while injecting much-needed capital into Neta.
Neta Auto, founded in 2014 by Hozon New Power Auto, has struggled since mid-2024, facing a series of challenges that have hindered its growth. As a result of declining demand, production was suspended, widespread job cuts were implemented, and the company embarked on an urgent search for external financing to stay afloat. On February 10, 2025, Neta revealed the collapse of its E-round financing plan, which had aimed to raise approximately 4-4.5 billion yuan (552-621 million USD), marking a significant setback for the company. The lead investor, supported by a prominent BRICS nation fund, committed to investing 3 billion yuan (approximately $414 million), but this pledge was conditional upon recommencing production and attracting equivalent investments from other sources; unfortunately, neither of these prerequisites were fulfilled.
Although Neta’s Tongxiang manufacturing facility temporarily reopened in early January, production did not fully resume due to an acute materials shortage. The failure ultimately prompted the investor to pull out, effectively killing the deal in its tracks.
Neta’s valuation suffered a significant blow. By 2023, a Tongxiang authorities entity provided 1.53 billion yuan (approximately $211 million USD) in funding, valuing the corporation at 42.3 billion yuan (roughly $5.8 billion USD). By 2025, the startup’s proposed 50% stake sale at just 3 billion yuan (approximately $414 million), a drastic markdown from its original valuation of six billion yuan (around $828 million), resulted in an astonishing 80% decline. The move infuriated both state-backed and early traders, as well as 360 Safety Technology’s founder, Zhou Hongyi, who subsequently cancelled his $138 million follow-on investment pledge. Confidence in Neta’s administration has significantly eroded over time.
Neta’s financial performance has been marked by cumulative losses totalling 18.3 billion yuan (approximately 2.53 billion USD) over a three-year period, with outstanding debts to suppliers amounting to 6 billion yuan (or around 828 million USD). The corporation suggests transforming 70% of outstanding provider payments into equity, while making the remainder payable in installments; however, it cautions that without additional capital, it risks defaulting on wage and social insurance payments. If Neta were to go bankrupt, authorities would likely prioritize traders in debt compensation, potentially putting suppliers at risk of significant financial losses.
Compounding its woes, Neta may incur penalties in Thailand, where it had previously received up to 150,000 baht (approximately $4,100 USD) in subsidies per vehicle. By 2025, Neta must meet its native manufacturing targets, or risk forfeiting government-backed incentives, including subsidies, tax breaks, and any potential curiosity in the form of compensatory measures.
Despite the chaos, Neta still holds onto significant technological and market value. On March 26, the company achieved a landmark deal, settling $276 million in debt obligations with 134 core suppliers through a debt-for-equity swap, while also securing financial support from prominent entities in Thailand and Hong Kong’s Solotech.
If a deal goes ahead, Toyota could potentially utilize Neta’s assets and local knowledge to accelerate its electric vehicle (EV) expansion in China. Despite speculation, Xu Yiming, Toyota China’s Model Communications Director, flatly dismissed the rumors: “We’re not aware of any such information.”
Neta’s gross sales plummeted in 2024, dropping to just 64,500 items. The following January, a staggering 98% decline was recorded, with a mere 110 vehicles sold, marking a drastic year-over-year slump? The corporation has faced scrutiny regarding its reliance on outdated technology and overly ambitious performance assertions. The fall from grace was starkly evident as founder Fang Yunzhou publicly apologized to suppliers and sellers via a viral video, underscoring the catastrophic magnitude of the debacle.
Supply: IT-Residence
