【Epoch Times News, June 4, 2024】
The mainland electric vehicle manufacturer, Ideal Automobile, has been reported to be laying off employees, potentially affecting nearly ten thousand staff members. The main reason for the layoffs is the poor sales performance of their first all-electric vehicle, which did not meet expectations.
Ideal Automobile employee Zhang Tong (pseudonym) recently revealed to mainland media “First Financial” that “this round of layoffs was sudden and there was no prior notice given.” The company internally implemented personnel adjustments in a phased manner.
There were reports as early as May of this year stating that the layoffs would account for 18%, equivalent to 5600 people, while other reports indicated that the number of layoffs could reach as high as 10,000. Among them, the sales and service operations department saw a reduction of over 400 people, the recruitment department reduced from over 200 people to 40 to 50 people, and the autonomous driving team will be reduced to less than 1000 people.
Several employees from different departments at Ideal Automobile stated that there was no clear indication of the number of layoffs within the company. However, based on the intuitive feelings of the employees, many departments are indeed undergoing layoffs, and the scale is not small.
Ideal Automobile has not responded to inquiries regarding the layoffs.
Zhang Tong mentioned, “After this round of organizational optimization, many people have left, some of whom had only been in the job for about half a year. This has created a sense that the company’s overall organizational direction or planning was wrong, ultimately leaving the employees to bear the consequences.”
Regarding the layoffs, “First Financial” believes that the failure of the company’s first all-electric vehicle, Mega, was the main reason behind it.
Top executives at Ideal Automobile had high hopes for the launch of Mega, aiming for it to become the top-selling luxury vehicle priced over 500,000 RMB in the market. They also aimed for this car to be the cornerstone of Ideal Automobile’s goal of selling 800,000 vehicles this year. However, the sales of Mega fell far short of expectations after its launch.
Currently, a large number of Mega products are parked in Ideal Automobile’s Beijing smart factory campus. Moreover, even during peak commuting hours, there are very few employees entering and leaving the premises.
Following the failure of Mega, Ideal Automobile has made adjustments such as reducing delivery guidance, revising annual sales targets (during the first financial report meeting, Ideal Automobile lowered its annual sales target from the initial 800,000 vehicles to 560,000 to 640,000 vehicles), officially lowering prices across all vehicle models, making significant organizational adjustments, delaying the release schedule of upcoming all-electric products, and more. The most significant change was the substantial cost-cutting measures and the subsequent large-scale layoffs.
There are reports suggesting that if Ideal’s performance in the third quarter continues to disappoint, the company is very likely to initiate a second round of layoffs in September this year.
A middle-level employee at Ideal Automobile commented, “Employees who are generally at the downstream of work are very anxious at this time, so there is a mentality of ‘lying flat’ (a term referring to being passive and unambitious) because they don’t know when they might be optimized out; due to the subjectivity in the screening mechanism, employees in the midstream of work also have a similar mentality. The entire team of downstream employees is in a state of anxiety, leading to lower team efficiency.”
Under the drag of declining performance, Ideal Automobile recorded an operating loss in the first quarter of this year. The operating loss for the first quarter was 5.8 billion RMB, with an operating loss rate of -2.3%.
As of 10:44 am Beijing time on June 4th, Ideal Automobile’s stock price was reported at 79.550 Hong Kong dollars per share, marking a decline of 3.34%.
Ideal Automobile is a Chinese manufacturer of new energy vehicles, producing and selling luxury intelligent electric vehicles. It was founded in July 2015, headquartered in Beijing, with its own production base located in Changzhou, Jiangsu Province.