Chinese electric vehicle (EV) startup WM Motor has filed for bankruptcy, signaling the end of a once-promising company in the competitive Chinese EV market. The bankruptcy case is being handled by a court in Shanghai, as stated in a filing on the national enterprise bankruptcy information disclosure platform.
The troubles for WM Motor began after its backdoor listing through a reverse takeover with Hong Kong-listed Apollo Future Mobility fell through. The company had previously attempted to seek a listing in Shanghai’s STAR Market and Hong Kong, but both attempts failed. In September, U.S.-listed second-hand car dealer Kaixin Auto Holdings announced a non-binding acquisition term sheet with WM Motor, but it seems that deal did not materialize.
WM Motor, founded in 2015 by auto veteran Freeman Shen, was once seen as a rising star among Chinese EV startups, alongside companies like Nio, Li Auto, and XPeng. It had prominent backers in Chinese tech giant Baidu and Shanghai’s state-owned asset regulator. However, the company struggled to turn a profit in the capital-intensive auto sector.
According to its stock prospectus released in June 2022, WM Motor’s losses doubled to 8.2 billion yuan ($1.13 billion) over the past three years. This financial struggle ultimately led to its bankruptcy filing.
The Chinese EV market has been witnessing intense competition, especially with more established players like Nio and XPeng gaining traction. China’s passenger vehicle sales saw a return to growth in August, thanks to discounts and tax breaks for green vehicles. However, consumer spending on big-ticket items like cars remains uncertain due to the shaky post-COVID economic recovery.
This bankruptcy filing by WM Motor serves as a reminder of the challenges faced by startups in the highly competitive Chinese EV market, as companies vie for dominance and profitability amidst price competition and uncertain consumer sentiment.
