As pricing competition in the biggest car market in the world heats up, Chinese electric vehicle startup WM Motor has filed for bankruptcy, signaling the end of a prospective leader among China’s EV manufacturers.
According to a file made on the National Business Bankruptcy Information disclosure website on Monday, a court in Shanghai is handling the bankruptcy case. In September, the ailing EV manufacturer and U.S.-listed used vehicle reseller Kaixin Auto Holdings (K640.F) announced a non-binding purchase term sheet.
The transaction took place after WM Motor’s attempt to list via a backdoor reverse takeover with Hong Kong-listed Apollo Future Mobility failed. The failed bid was considered a survival tactic after tWM Motor’s unsuccessful attempts to pursue a listing in Shanghai’s STAR Market and Hong Kong.
Freeman Shen, a well-known auto industry veteran, founded WM Motor in 2015. It was regarded as one of the emerging Chinese EV companies, along with Nio (9866 . HK), Li Auto (2015 . HK), and XPeng (9868 . HK). Chinese internet giant Baidu (9888. HK) and Shanghai’s state-owned asset regulator were some of its sponsors. However, the Shanghai-based firm had difficulty turning a profit in the capital-intensive car industry.
According to WM Motor’s stock prospectus published in June 2022 for a proposed Hong Kong IPO, the company’s yearly losses increased to 8.2 billion yuan ($1.13 billion) over the three years leading up to 2021.
Deeper discounts and tax advantages for green vehicles helped to improve consumer confidence, bringing China’s passenger vehicle sales back to growth in August year-over-year, breaking a losing skid that had lasted since May.
However, worries remain over consumer spending on expensive products like vehicles in the uncertain post-COVID economic recovery.
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