As a representative of the new Chinese car-making force, Nio (NYSE: NIO) has received much attention and praise. But in fact, it's just one of this year's happy stories, not a panorama of China's electric vehicle startup scene.
Hangzhou-based Changjiang EV has been ruled to enter bankruptcy and liquidation proceedings, and the local court will hold its first creditors' meeting on November 26, PEDaily.cn said, citing court documents.
Since the second half of 2018, Changjiang EV has been rumored to be strapped for cash as state subsidies retreat and market demand declines.
The company's only passenger car model, the "eCOOL," was released back in April 2016, but to date, it has yet to achieve mass production or delivery on the market. After two years of suffering, Changjiang EV finally chose to go bankrupt.
According to Changjiang EV's internal notice, the company officially announced the termination of labor contract relations with some of its employees on November 1. As for the employees' wages in arrears, the next step is to identify them according to legal regulations.
Four years ago, Hong Kong-listed FDG Electric Vehicles Limited invested 5.1 billion yuan to build Changjiang EV, but it was unexpected that after only four years, Changjiang EV had burned through all the funds.
As the parent company of Changjiang EV, FDG also has its own problems.
According to FDG's latest annual report, it has been losing money for years. In the past five fiscal years (FY2015 to FY2019), the company's losses attributable to owners were HK$410 million, HK$228 million, HK$555 million, HK$2,230 million, and HK$1,990 million, respectively.
In addition, FDG has been suspended from trading on the Hong Kong Stock Exchange since July 2 this year, leaving its market capitalization at just HK$476 million.
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