Advertisement

China’s EV war: WM Motor files for bankruptcy, dashing the hopes of investors Tencent and Baidu to challenge Tesla

  • Carmaker, whose petition is being reviewed by a Shanghai court, says in Weibo post it hopes to come back by introducing strategic investors from around the world
  • WM’s failure ‘a rude reminder’ for other start-up founders and investors that China’s EV market will become tougher for cash-strapped players, Shanghai analyst says

Reading Time:2 minutes
Why you can trust SCMP
3
WM Motor’s EX6 Plus. The company has grappled with financial problems since the second half of last year due to a sharp fall in deliveries. Photo: Handout
Daniel Renin Shanghai
Embattled Chinese electric vehicle (EV) start-up WM Motor has filed for bankruptcy, sending a reminder to the rest of the industry about the cutthroat competition in the world’s largest automotive and EV market.

The Shanghai-based carmaker’s petition is being reviewed by the Shanghai No. 3 Intermediate People’s Court, according to a filing published on the national enterprise bankruptcy information disclosure platform on Monday. It normally takes six months before a court in China gives its verdict on a bankruptcy case.

WM said in an official post on Weibo, China’s Twitter-like social-media platform, on Tuesday that it would still aim for a rebirth funded by strategic investors from around the world.

“Among troubled EV start-ups in China, WM is the most well-known, as venture capital and private equity investors placed much trust in [founder Freeman Shen Hui] and its vehicles,” said Ding Haifeng, a consultant at financial consultancy Integrity in Shanghai. “Its failure is also a rude reminder to other start-up founders and investors that the fast-growing mainland Chinese EV market will become tougher for cash-strapped players because a flood of new models will hit the market in the coming two years.”

At least 15 once-promising EV start-ups with a combined annual production capacity of 10 million cars have already either collapsed, or been driven to the verge of insolvency, as bigger players gain market share, leaving smaller contenders like WM to fight for scraps, according to a report by state-owned newspaper China Business News mid-last month.
Moreover, He Xiaopeng, the CEO of Guangzhou-based EV start-up Xpeng, said as early as April that only eight EV makers would remain by 2027, because smaller players will not be able to survive the fierce competition in the fast-growing industry.
Advertisement