- Baidu and Geely will help compensate workers who’ve lost their jobs but haven’t committed to providing Jiyue with more funding.
- Over the past year, Jiyue launched an electric SUV and an electric sedan but neither have sold well.
- Jiyue’s CFO may be hiding out in Singapore with his family.
Chinese electric carmaker Jiyue is on the brink of collapse despite being backed by technology giant Baidu and automotive conglomerate Geely, and it’ll take a miracle to avoid the fate of so many other failed Chinese automakers in recent years.
Jiyue was initially formed through a joint venture between Baidu and Geely, with Baidu owning 55% and Geely owning 45%. However, the company was later restructured, providing Geely with a 65% ownership stake and leaving 35% with Baidu. It launched its first model – the Jiyue 01 – last year as a stylish competitor to the Tesla Model Y. It was followed up by the gorgeous Jiyue 07 sedan, which quickly picked up a Red Dot design award after its launch.
Read: New Jiyue 07 Blazes Into EV Scene With Gorgeous Fastback Looks
However, sales have been slow, and this year, Jiyue has managed to shift just 13,834 vehicles across the country. It’s also experiencing severe financial difficulties, and according to Chinese media, chief financial officer Liu Jining and his family may have fled to Singapore, taking with him the company’s books. It’s also believed Baidu has discovered a financial hole of up to 7 billion yuan (~$962 million) that was unaccounted for and opted against investing an additional $412 million in the company.
CarNewsChina adds that chief executive Xia Yiping may have significantly overpaid suppliers. Approximately 70% of all parts used by Jiyue come from Geely, and as of February, it owed more than $200 million to its parent company for these parts.
In a statement issued last week, Jiyue said it would ditch projects that don’t improve its financial position. It also fired several departments, delayed salaries for December, and suspended social security payments to employees in November. Baidu and Geely quickly responded to the uncertainty, saying they would help Jiyue make payments for social security contributions, fund after-sales servicing for existing customers, and compensate workers who’ve lost their jobs.
A restructuring plan has been presented to shareholders, but it remains unclear if it will save the company. If Jiyue does go bust, it will follow Human Horizons as the latest Chinese car startup unable to survive increasingly fierce competition across the local market.
