The once flourishing Nezha Automotive, valued at up to 25 billion RMB in China, is now facing the road to bankruptcy. This rising star company in the Chinese car manufacturing industry has recently filed for bankruptcy for its affiliated companies, marking the end of its development.
According to the Qichacha app, the bankruptcy proceedings for Nezha Automotive’s affiliated company, Hezhong New Energy Automobile Co., Ltd., have been updated. On June 19th, a new bankruptcy case was added, with Zhejiang Zicheng Law Firm as the administrator and the Intermediate People’s Court of Jiaxing City, Zhejiang Province as the handling court. Previously, Shanghai Yuxing Advertising Co., Ltd. had applied for bankruptcy review of the company.
Nezha Automotive’s bankruptcy is not a sudden event, but the result of long-term financial crisis. According to Tianyancha and Qichacha data, Shanghai Yuxing Advertising Co., Ltd. has submitted a bankruptcy application to the Intermediate People’s Court of Jiaxing City, with Zhejiang Zicheng Law Firm designated as the administrator, signaling Nezha Automotive’s formal entry into judicial bankruptcy proceedings.
The “last straw” that broke Nezha’s back was a looming crisis of defaulting on bills totaling up to 199 million RMB.
As of the end of May this year, Hezhong New Energy Automobile Co., Ltd. had accumulated a shocking amount of overdue bills. At the same time, an internal salary crisis escalated, with many employees reporting long-term unpaid wages, some not receiving salaries for several months, facing the pressure of mortgage and car loan defaults. Recently, employees received notices to work from home, with the office access control system malfunctioning, and some employees had not shown up at the office for two months.
What’s more striking is that just 10 days after relocating its headquarters to the new address in the Hongqiao Business District in Shanghai, nearly a hundred employees surrounded Chairman and CEO Fang Yunzhou’s office demanding pay. In a video of the scene, facing the employees’ legitimate demands, Fang Yunzhou showed impatience and stated that he would introduce a third-party lawyer for asset liquidation and would no longer take responsibility, suggesting employees resolve the matter through legal means. This further fueled the anger of the employees, and now the company has “no business to operate,” and employees can only wait for bankruptcy liquidation.
Established in 2014, Zhejiang Hezhong New Energy introduced the Nezha brand in 2018, quickly establishing a market presence with its “low-price, high-configuration” strategy, focusing on B2B demand such as ride-hailing and leasing. In 2020, they delivered 15,000 vehicles, which increased to 70,000 in 2021 and surpassed 150,000 in 2022, becoming the first new car manufacturer to deliver 150,000 vehicles in a year, with a valuation soaring to 25 billion RMB, earning the title of the “biggest dark horse.”
However, starting from 2023, the competition in the new energy vehicle market intensified, and Nezha’s sales plummeted drastically. By the end of 2024, annual sales were only 64,500 vehicles, and in January of this year, domestic retail sales dropped to just 110 vehicles, essentially marginalizing the brand in the market.
The sharp decline in sales was due to structural crises. With accumulated losses exceeding 18 billion RMB over three years, insufficient investment in research and development led to lagging product iteration and a lack of core technological competitiveness. Chairman and CEO Zhang Yong tried to address the crisis through measures like expanding product lines and increasing intelligence levels, but it was not enough to avert the crisis.
Desperate for survival, Nezha proposed transitioning from a manufacturer to a “service-oriented company,” focusing on software development and ecosystem services, and abandoning the heavy asset vehicle manufacturing model. However, this transition was interpreted as “abandoning the core business,” raising doubts among investors and suppliers, ultimately failing to reverse the downward trend.
In March of this year, Nezha boldly announced an overseas expansion plan and held a dealer conference in Thailand. However, the reality of zero domestic sales and production shutdown made their internationalization strategy seem feeble and ineffective. More than 20 of the over 300 nationwide dealers collectively voiced grievances, accusing the company of “collecting payment without delivering vehicles” and defaulting on rebates. Dozens of suppliers also rallied at the Shanghai headquarters to demand payment, with some even engaging in protests.
Parts shortages led to paralyzed after-sales service. According to Sina Finance reports, Nezha S model owners reported issues with their range extenders due to a lack of spare parts, forcing them to use only electric mode, significantly reducing their range to just one or two hundred kilometers. The disruption in maintenance services left owners in the dilemma of having cars they could not use. Qichacha shows that the affiliated companies of Nezha were subject to enforcement targets exceeding 150 million RMB, and were recently fined 33,000 RMB for violating labor protection supervision regulations.