As the Chinese Communist economy slides, the turmoil within the automotive sector deepens. On May 29, the “Nezha Auto” logo on the exterior wall of Nezha Auto’s headquarters in Shanghai was dismantled, along with the symbol of the Nezha Experience Center located at the headquarters. Prior to this, former CEO Zhang Yong had 40.5 million yuan of equity frozen.
Chinese media reports indicated that Nezha Auto disclosed the reason for the logo removal was due to the lease expiry, and the company is planning to relocate. The new office address is temporarily unknown, but preparations have been made.
The dismantled logo was valued at a million. In April this year, former Nezha Auto CEO Zhang Yong stated in his social circle that the fountain emblem of Nezha Auto had been in use since June 1, 2018, with a logo design cost not exceeding 1 million yuan.
Hangzhou Hecreate Energy Technology Consulting Partnership Enterprise (referred to as Hecreate) was established in November 2022. Its scope of business includes information technology consulting services, technology intermediation services, and corporate management consulting. It was founded by Zhang Yong, Qian Dezhu, and Chen Yaoguang, with equity stakes of 51%, 28%, and 21% respectively, with Zhang Yong being the actual controlling shareholder.
In May this year, Zhang Yong received another equity freeze notice. According to Tianyancha, the frozen equity under Hecreate owned by former Nezha Auto CEO Zhang Yong amounted to 40.5 million yuan, with the freeze period lasting from May 13, 2025, to May 12, 2028. Not only Zhang Yong’s equity was frozen, but those of his two partners were also frozen.
Qian Dezhu’s equity was frozen on May 13, with a frozen equity amount of 22.24 million yuan, while Chen Yaoguang’s equity was frozen on May 19, with a frozen equity amount of 16.68 million yuan.
Nezha Auto faced a financial chain rupture leading to operational dilemmas. With over 18 billion yuan in losses for three consecutive years, as per Nezha Auto’s prospectus submitted to the Hong Kong Stock Exchange, the losses in 2021 were 4.84 billion yuan, followed by 6.66 billion yuan in 2022 and 6.87 billion yuan in 2023.
The continuous losses at Nezha Auto pushed the company into financial distress. In October 2024, reports surfaced regarding large-scale layoffs, pay cuts, overdue supplier payments, and production halts.
From November to December last year, over 3,000 Nezha Auto employees negotiated resignations or were laid off, yet three months after leaving, many had not received compensation. Consequently, many employees jointly sought overdue wages, amounting to nearly 400 million yuan.
On December 6, 2024, Nezha Auto announced that Zhang Yong would no longer serve as CEO, transitioning to a company advisor. Nezha Auto’s founder and chairman, Fang Yunzhou, took over as CEO.
According to media reports, Nezha Auto has begun to dissolve its research and development team. Insiders revealed that the R&D team would be completely disbanded, with those signing the resignation procedures this week receiving N+1 compensation, effective until May 30. Currently, Nezha Auto has around 1,700 employees, with approximately 200 in the resignation process.
Shortly after, Nezha Auto denied the reports, stating that “recent online rumors about the dissolution of Nezha Auto’s R&D team are untrue.” They claimed, “the company is currently optimizing its organization and processes to further reduce costs and increase efficiency.”
Nezha Auto has been plagued with negative news throughout this year. In January, the Nezha Auto official website encountered issues displaying a “system under maintenance, please try again later” message. In April, some car owners reported network disruptions in the Nezha Auto app, leading to issues with Bluetooth keys, inability to connect to the car’s system, and remote control malfunction, causing challenges for many car owners in post-sales service.
In May, following debt collection disputes with suppliers and dealers, Nezha Auto faced bankruptcy scrutiny filed by an advertising company. Recent market reports indicate that the state-owned shareholders of Nezha Auto’s parent company, Hezhong New Energy Vehicle, are seeking to dismiss chairman and CEO Fang Yunzhou.