Backed by tech giant Baidu and car manufacturer Geely, the Chinese electric vehicle brand “Ji Yue” launched its second car model just three months ago, but announced a massive layoff and closure of operations this week. The Chinese electric vehicle industry seems to have entered a phase of reshuffling, drawing attention from the public.
One Ji Yue car female host was broadcasting a car sale when she was suddenly informed by a colleague that the company had closed down. She instantly broke down in tears.
On December 13, Baidu and Geely officially released a joint statement announcing the layoff and closure of “Ji Yue Motors,” a joint venture established by the two companies. The statement cited significant changes in the industry’s competitive landscape, rendering their established business plans unfeasible due to operational challenges. They promised to maintain the normal use, after-sales service, and maintenance of user vehicles as shareholders and seek reasonable and legal solutions to other matters.
Earlier, on December 11, netizens reported through videos that Ji Yue Motors suddenly shut down, with security guards surrounding the premises. By December 12, multiple mainstream Chinese media outlets reported that several Ji Yue Motors departments had announced their dissolution. Many employees feared the boss fleeing as they besieged Ji Yue CEO Xia Yiping at the company’s headquarters, demanding overdue social insurance, medical insurance, provident fund payments, December salary, severance pay, etc. It was reported that the company had stopped paying social insurance since November.
Employees owed wages started live streaming their actions, with some stating that after the dissolution announcement, employees began taking away items and equipment from stores as compensation. On December 12 afternoon, Ji Yue CEO Xia Yiping held an internal meeting, mentioning that the company’s accounts had been frozen, but he vowed not to run away and was actively seeking financing. Prior to this, on December 2, Ji Yue Motors had denied rumors of any issues, claiming that everything was operating normally.
No one expected this car company, backed by two major groups, Baidu and Geely, to face such a sudden closure.
Official records show that in January 2021, Baidu and Geely jointly established Ji Du Motors, with Baidu holding 55% and Geely holding 45%. The company claimed to have created an “auto robot.” In June 2022, Ji Du Motors released its first concept car, the ROBO-01. In August 2023, due to production quality issues, Ji Du Motors changed its name to Ji Yue, and Geely’s stake increased to 65%, while Baidu’s controlled company, Shanghai Mikang Automotive Co., Ltd., held a 35% stake.
Despite positioning itself to rival Tesla, Ji Yue Motors’ sales remained low. In October 2023, Ji Yue launched its first model, the 01, which struggled to surpass a thousand units in sales for six months. From January to May 2024, 01’s monthly sales were 218, 147, 511, 362, and 1,001 vehicles; it wasn’t until July 2024 that sales gradually increased to 2,117, 2,605, 3,107, and 2,485 vehicles, still relatively lower compared to other car manufacturers, possibly only representing weekly delivery volumes for others.
Sam Fiorani, Vice President of AutoForecast Solutions, a car industry data forecasting company based in Pennsylvania, emphasized that Ji Yue’s exit from the Chinese electric vehicle market was partly due to mismatched market demand and manufacturers’ production speed: “Manufacturers had plans for explosive growth in electric vehicles, but the demand has not reached the expected level.”
Ji Yue had recently launched its second model, the 07, claiming to have invested over a hundred billion. However, it was reported that the company had defaulted on payments to suppliers, and internal rumors indicated shareholders no longer investing and the whole vehicle business shutting down.
Internally, Ji Yue had over 5,000 employees, including both full-time and outsourced workers, with the research and development department possibly facing complete layoffs, leaving only around 80 employees in the after-sales department.
Numerous Ji Yue employees expressed dissatisfaction with the abrupt handling of the situation. Over the past two days, they continued to fight for their rights.
On December 14, a Ji Yue employee confirmed that after negotiations, the company had paid the social insurance for November. However, owing to significant financial issues, Geely was unlikely to take over. Initially, Baidu might have considered reinvesting, but due to the extensive financial shortfall, future investments were canceled.
Next, employees planned to continue defending their rights, while suppliers were also impacted negatively.
Ji Yue employee Ms. Gao revealed that the official Chinese Communist Party began maintaining order. Those broadcasting live from the headquarters dared not show their faces, as they risked their broadcasts being terminated. Many had received November’s social insurance payments, but not everyone. Internal divisions and negotiations were ongoing, and staff representatives were leading efforts. Suppliers were unable to enter the premises, not out of fear but because any calls for help led to their removal. One employee was reportedly taken away.
The shelving of Ji Yue had repercussions on consumers as well. Despite promises from Baidu and Geely to ensure normal vehicle use, after-sales service, and maintenance, online images circulated showing Ji Yue’s vehicle internet service in arrears, with network companies threatening to cut off services if payments were not made by the 20th.
Netizens joked that without payment by the 20th, all Ji Yue vehicles would lose internet connectivity, turning their auto robots into four-wheeled electric bicycles.
The Chinese electric vehicle, or new energy vehicle, industry has been labeled as a new force in Chinese car manufacturing. MarkLines data indicated that in 2023, China’s new energy passenger car sales reached 9.017 million units, with the top 5 companies, including Li Xiang, NIO, Leapmotor, XPENG, and Hezhong, collectively selling 946,000 units, making up 10.5% of the total sales.
Competition in the Chinese electric vehicle industry has become increasingly fierce. On November 25 this year, NIO founder, chairman, and CEO Li Bin stated in an internal letter on the company’s tenth anniversary that the race in the intelligent electric vehicle industry had entered its most competitive and brutal phase, predicting that only a few outstanding companies would survive.
On December 6, 2024, Ji Yue Motors announced the removal of CEO Zhang Yong, with founder and chairman Fang Yunzhou taking over as CEO, facing circumstances similar to Ji Yue Motors, teetering on the brink. In the past, Nezha Auto, which was once popular in 2018, had surged to the fourth spot in the new force list by delivering 69,700 vehicles in 2021. However, recent reports revealed Nezha Auto undergoing extensive layoffs, salary cuts, and failing to pay suppliers, similar to Ji Yue, facing a precarious situation.
In Shanghai, AiChi Auto was exposed last year for withholding employee wages. Due to non-payment of rent, property fees, utilities, etc., AiChi Auto’s headquarters in Shanghai’s Yangpu District experienced a blackout and eventually reached the brink of closure.
In recent years, new energy vehicles have been highlighted by the Chinese government as a key sector besides real estate to drive economic growth, part of the external trade’s “new three items” focus, also including lithium batteries and solar panels. The China Association of Automobile Manufacturers announced on November 14 that China’s new energy vehicles had produced a total of ten million units this year. However, many voices expressed concerns about China’s overcapacity in new energy vehicles.
Professor Xie Tian of the Aiken Business School at the University of South Carolina previously told Epoch Times that China’s electric vehicle overcapacity must be alleviated through export dumping, exacerbating unemployment and other economic problems.
According to data from China’s National Bureau of Statistics, the overall “capacity utilization rate” of Chinese new energy vehicles varied from 57% to 76% in 2023. Companies, including NIO and Guangzhou XPENG, had capacity utilization rates under 50%, whereas a few leading brands like BYD and Tesla had capacity utilization efficiencies exceeding 90%.
While fears of overcapacity persisted, Chinese new energy vehicle exports led to trade disputes. The European Union implemented temporary anti-subsidy tariffs on Chinese electric vehicles at the end of October, while the United States had applied a 100% tariff on Chinese electric vehicles as early as the end of September.
The domestic Chinese electric vehicle market also faced cutthroat competition. Tesla’s planned introduction of fully autonomous driving systems in China and Europe by 2025 might trigger a new round of fierce competition.
The development of new energy vehicles is considered a microcosm of China’s entire industrial economy, infused with hints of planned economy. The electric vehicle sector has benefited from government policies like subsidies, industrial planning, and dual credit systems (CAFC and NEV credits). In the first half of 2021, tech giants Xiaomi and Baidu had announced their entry into the electric vehicle market.
Currently, companies like NIO, XPENG, and Nezha opt for traditional carmakers to carry out contract manufacturing, with NIO partnering with JAC Motors, XPENG with Haima, Nezha and Bordrin with FAW, and Leapmotor with Changjiang Auto.
Ms. Zhao, a Ji Yue Motors employee, mentioned in an interview with Epoch Times on December 14 that the Ji Yue incident would likely instill fear among consumers of other car manufacturers, with major brands possibly performing better, such as Xiaomi and Tesla.
Having recently bought a Ji Yue car herself, she expressed uncertainty about renewing the car’s insurance next year. Around 500 company employees, including herself, had purchased Ji Yue’s vehicles due to internal discounts.
She highlighted the trend of “light-asset mode” seen in many so-called new car-making forces, lacking actual manufacturing capabilities. These companies, like Xiaomi, merely rebrand vehicles rather than manufacturing them, leaving the actual car production to state-owned traditional manufacturers. The industry is fraught with opportunism and lacks long-term business strategies, hinting at an inevitable outcome for China’s electric vehicle sector. The rush to invest without foresight now appears to have reached a point of no return, signaling impending chaos in the industry.