Chinese electric vehicle (EV) startup Ji Yue, a joint venture between Baidu and Geely, is grappling with severe financial turmoil and an operational crisis that have left its future hanging by a thread. The company, once heralded as a potential Tesla challenger, has admitted to significant difficulties as it battles slumping sales, unpaid wages, and a dwindling workforce.
In an internal memo on Wednesday, CEO Xia Yiping acknowledged the dire situation, outlining plans for drastic restructuring. Proposed measures include merging redundant departments, discontinuing financially unviable projects, and implementing widespread layoffs. The announcement followed months of poor sales performance, with Ji Yue delivering only 14,000 vehicles in the first 11 months of 2024, averaging fewer than 1,300 units per month.
The company's woes have sparked visible unrest among employees. Videos and live streams circulating online on Thursday captured tense scenes at Ji Yue's Shanghai headquarters, where dozens of staff members confronted Xia, demanding clarity on unpaid wages and overdue benefits. In one video, Xia attempted to reassure the crowd, urging them not to be angry and pledging to find solutions.
According to media reports, Ji Yue has suspended contributions to employee social security and benefits for November and December. Employees now face the difficult choice of leaving with a severance package or staying on without pay for the foreseeable future. The research and development department is reportedly being dismantled, with just a fraction of Ji Yue's approximately 5,000-strong workforce expected to remain.
Ji Yue's struggles are emblematic of the challenges faced by smaller EV brands in China's highly competitive and saturated auto market. John Zeng, head of market forecast for China at GlobalData, noted that the crisis could "accelerate the demise of smaller brands being marginalized" as consumers increasingly gravitate toward established market leaders.
The financial strain has also impacted Ji Yue's after-sales services and retail operations. Many showrooms have ceased sales activities, locking away test-drive vehicles and initiating inventory checks. Customers awaiting deliveries have been warned of potential delays due to supply chain disruptions.
The company's troubles extend to its parent firms. Baidu and Geely, which hold 35% and 65% stakes respectively, launched Ji Yue (originally branded as Jidu Auto) in 2021 with high aspirations of revolutionizing smart EVs. However, regulatory hurdles and a 2023 ownership restructuring left Geely in greater control of production, while Baidu focused on technology and design.
Despite the turmoil, Ji Yue insists it is actively seeking new funding. In a late-night statement, the company assured customers that vehicle services, including maintenance, would continue as usual. However, it admitted to facing delays in addressing overdue payments to suppliers.
