The promising Chinese electric vehicle startup WM Motor, also known as Weltmeister, has filed for bankruptcy. In a document filed in a Shanghai court, the company cited operational challenges and insufficient revenue to cover expenses, reverse losses, and service debts. The company’s financial problems can be attributed to intense competition in the Chinese EV market, rising costs, supply chain disruptions, the impact of the pandemic, and market fluctuations.
Challenges Facing the Chinese EV Market
China currently has around 200 electric vehicle manufacturers, a result of the government’s goal to have 25% of new car sales be electric by 2025. The market’s size has led to price wars initiated by major players like SAIC and BYD, causing several EV manufacturers, including WM Motor, to struggle.
Kaixin Auto Holdings, a U.S.-listed second-hand car dealer, proposed a non-binding acquisition term sheet with WM Motor in an attempt to assist the struggling EV manufacturer. However, previous attempts by WM Motor to list on the Shanghai STAR Market and through a reverse takeover with Apollo Future Mobility in Hong Kong were unsuccessful.
WM Motor faced early financial difficulties due to product defects that resulted in explosions and fires in its cars. The company recalled vehicles in 2020 because of spontaneous combustion issues, which it attributed to faults in the battery production process.
WM Motor’s Strengths and Outlook
Despite its bankruptcy filing, experts in the Chinese automotive industry believe that WM Motor has the potential to reorganize and recover. The company possesses strengths such as a strong brand and a loyal customer base. WM Motor was founded in 2015 by former Geely and Volvo executive Freeman Shen and has received support from prominent backers like Baidu, Tencent, and a Shanghai state-owned asset regulator. It has also developed its own battery and electric powertrain technologies.
WM Motor launched its first production car, the EX5, in 2018 and has since introduced other EV models such as the EX6, W5, W6, and W8. The company has sold over 100,000 vehicles and has expanded into niche export markets like Israel, the United Arab Emirates, South America, and the Philippines. Prior to the bankruptcy announcement, WM Motor had plans to enter Thailand and Indonesia and had made indent sales to Germany and Spain.
The Future of the Chinese EV Market
While Chinese EV startups face significant challenges, including price wars and rising costs, the Chinese EV market is expected to continue growing rapidly in the coming years.
