HiPhi, the luxury battery electric vehicle (BEV) brand of Chinese tech company Human Horizons, has halted production as it struggled with “cut-throat” competition in the local market, according to local reports.

The automaker, founded in 2017, was understood to have suspended production at its plant in Shanghai amid reports it had run out of cash, with some sources claiming it failed to pay its January wage bill.

Unconfirmed reports suggested the company told employees it was shutting down production for six months starting immediately while management found a solution to the cash shortage.

HiPhi, which made mainly high end BEVs, struggled to make money in an increasingly price competitive Chinese market.

The launch of a new entry level model last year, with prices starting at CNY339,000 (US$47,000), was not enough to turn the company around. Until then, the company mainly made BEVs priced at US$70,000-US$120,000.

Last year the company agreed with Saudi Arabia’s investment ministry to invest US$5.6bn in a joint venture to develop and produce BEVs in Saudi Arabia for regional markets. It was unclear whether the Saudi government would come to the company’s rescue.

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Sluggish economic growth in China has meant that automakers have had to cut prices in the last year to drive up sales with many other BEV startups also coming under significant pressure.

Last October Shanghai-based WM Motors filed for bankruptcy, pledging at the time it would make a comeback with new funding.