WM Motor, a Chinese electric vehicle startup, has filed for bankruptcy, signaling the end of a promising standout among China’s EV producers when pricing rivalry in the world’s largest auto market is heating up. WM Motor was founded in 2014.
According to a file on the National Business Bankruptcy Information Disclosure portal on Monday, a court in Shanghai is now handling the bankruptcy case.
“WM Motor’s planned reorganisation will introduce strategic investors from across the globe to achieve its rebirth,” the firm stated in a statement published on its official Weibo account on Tuesday.
The manufacturer of automobiles stated that it has been trapped in operational difficulty in recent years due to the impact of the pandemic, the sluggishness of the capital market, big price swings in raw materials, and setbacks in getting the money required for operations and development.
The EV manufacturer is having financial difficulties, and the U.S.-listed used vehicle dealer Kaixin Auto Holdings (K640.F) revealed in September that they had signed a non-binding purchase term sheet with the company.
The transaction occurred after WM Motor’s attempt to list the company indirectly through a reverse takeover with a Hong Kong-listed company called Apollo Future Mobility was unsuccessful.
After WM Motor’s unsuccessful attempts to pursue a listing in Shanghai’s STAR Market and Hong Kong, the failed bid was considered a survival strategy by the company’s management.
WM Motor was recognized as one of the emerging Chinese electric vehicle startups together with Nio (9866. HK), Li Auto (2015. HK), and XPeng (9868. HK) when it was founded in 2015 by the renowned auto veteran Freeman Shen. It counted among its sponsors the Chinese internet giant Baidu (9888. HK) and the state-owned asset regulator in Shanghai.
However, the capital-intensive car industry proved challenging for the fledgling company in Shanghai to break even.
According to WM Motor’s stock prospectus issued in June 2022 for a proposed initial public offering in Hong Kong, the company’s yearly losses quadrupled to 8.2 billion yuan ($1.13 billion) over the three years leading up to 2021.
As deeper discounts and tax incentives for green vehicles lifted consumer enthusiasm in China, passenger vehicle sales in August increased year-on-year for the first time since May, halting a string of losses occurring since May.
Despite this, there is still cause for concern over consumer spending on high-ticket products like vehicles amid an uncertain post-COVID economic recovery.
