WM Motor, one of China’s highest profile electric vehicle (EV) startups, filed for bankruptcy after it failed to scale up production sufficiently to reverse losses and pay down debt.
Its sales in China are understood to have fallen by a third to around 27,500 units last year.
WM Motor, founded in 2015, implemented a significant cost cutting drive over the last year including salary cuts and layoffs to help it stay afloat.
The introduction of a fifth EV model, the M7, was also delayed as the company tried to reduce expenditure.
In a post on Wiebo, WM Motor cited the pandemic, sluggish capital markets and significant raw material price swings as the main reasons for its bankruptcy.
Founder and CEO, Freeman Shen, vowed to restructure debt and bounce back from bankruptcy.
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The company said: “WM Motor’s planned reorganisation will introduce strategic investors from across the globe to achieve its rebirth.”
In the meantime the company said it will continue to maintain aftermarket services for Chinese customers. The company has also exported some vehicles to Asia, Europe and Latin America.
News of the bankruptcy came just weeks after US listed used car dealer Kaixin Auto Holdings announced a non binding agreement to acquire WM Motor.
Before that, the automaker failed in an attempt to list in Hong Kong through a reverse takeover of Hong Kong listed Apollo Future Mobility following unsuccessful attempts to list on Shanghai’s Star Market. The company’s last successful fundraising was in 2020, generating CNY10bn (US$1.4bn) from outside investors.