Once a leading force in the Chinese new energy vehicle market, Nezha Auto, a subsidiary of Hezhong New Energy Auto Co., Ltd., was declared a dishonest debtor by the court on August 11 for violating property reporting regulations. This new energy car company has been mired in a debt crisis in recent years, owing suppliers over 6 billion yuan, facing frequent legal disputes, and even the possibility of bankruptcy restructuring, serving as a typical case of the “debt expansion, funding chain break” phenomenon in the Chinese new energy vehicle industry.
According to information from the China Execution Information Publicity Network and Qichacha, Hezhong New Energy Auto Co., Ltd. (hereinafter referred to as Hezhong New Energy) was listed as a dishonest debtor by the Haizhu District Court in Guangzhou for failing to fulfill property reporting obligations as required in the execution notice, marking its official status as a “defaulter.”
The case originated from a dispute over an exhibition contract, with an enforcement target amount of 57,594 yuan, currently classified as “completely unfulfilled.” However, this is just the tip of the iceberg of the legal troubles facing the company.
Tianyancha data shows that Hezhong New Energy is involved in 420 judicial cases (with 159 new cases added in 2025), totaling up to 240 million yuan. Among these cases, there are 88 trade contract dispute cases, accounting for over 20%. Looking at the years involved in the cases, 65.71% of Hezhong New Energy’s cases are from 2025 in the past five years, with the highest proportion.
Since 2024, the company has accumulated over 6 billion yuan in unpaid supplier debts.
Nezha Auto is an electric vehicle brand under Hezhong New Energy. In 2022, Nezha Auto topped the new energy vehicle sales charts with an annual sales volume of 152,000 vehicles, surpassing “We Xiaoli.” However, the brand’s market performance sharply declined starting in 2023, with its operations continuing to worsen.
In May 2025, Shanghai Yuxing Advertising Co., Ltd. applied for bankruptcy examination of Hezhong New Energy, followed by Hezhong New Energy officially initiating the bankruptcy process in June.
Hezhong New Energy’s plight comes at a critical juncture as the new energy vehicle industry transitions from “incremental competition” to “stock battle.” To seek opportunities for revitalization, Hezhong New Energy launched an intention to recruit investors through the Alibaba asset platform in July 2025.
According to the latest information from the platform, 66 potential investors have submitted preliminary registration materials, with the pre-recruitment process still ongoing.
The bankruptcy restructuring process provides a valuable opportunity for Hezhong New Energy to reallocate resources, repay debts, and restore normal operations.
However, industry analysts believe the key to the success of the restructuring lies in whether they can attract strategic investors with strong capabilities and formulate a viable operational revitalization plan. The new investors not only need to provide sufficient financial support but also bring advanced management philosophies and rich market resources to help Hezhong New Energy break free from its current predicament.
The challenges facing Nezha Auto are not isolated but a typical representation of the current “debt expansion, funding chain break” phenomenon in the Chinese new energy vehicle industry. In an increasingly competitive market landscape, many new energy car companies are facing unprecedented financial pressures and technological challenges.
The past few years have witnessed the most intense industry reshuffle in the Chinese automotive sector in forty years. From 2020 to August 2025, over 30 automotive companies in China, including Dongfeng Yulong, Lifan Auto, Zotye Auto, Baowo Auto, Hengchi Auto, Weimar Auto, Tianji Auto, Aichi Auto, Gahe Auto, and Nezha Auto, have delisted due to bankruptcy liquidation, share transfer, bankruptcy reorganization, company dissolution, among other reasons. On the other hand, head enterprises like BYD and Geely are aggressively expanding.
On August 11, the latest data released by the China Association of Automobile Manufacturers showed that the top five new energy vehicle sales leaders – BYD, Geely, SAIC, Changan, and Dongfeng – collectively held a market share of 64%; the top fifteen group sales accounted for a staggering 95.1% of total new energy vehicle sales.
UBS predicts that by 2030, there will only be 10-12 surviving new energy vehicle companies in China.