Inspired by Tesla’s success in the capital markets and enticed by Beijing’s generous subsidies, electric vehicle startups have proliferated in China over the past few years.
Many of them flamed out without ever rolling out a product.
The coronavirus epidemic, largely kept under control since April in the country, has further weakened the economy and made it far more difficult for remaining EV startups to raise capital.
In June alone, at least three startups ceased operations. Among them, two were considered legitimate hopefuls among all the prospects.
One is Bordrin, a company established in Shanghai in 2016 by Huang Ximing, a former senior engineer at Ford.
Bordrin unveiled its first product, an electric crossover, at the Shanghai auto show in April 2019. It was expected to launch production late last year and begin sales in early 2020.
But on June 15, Huang warned in an open letter posted on Bordrin’s social media site that the company had run into “severe operational difficulties” after failing to raise sufficient capital.
The same day, Bordrin placed all employees on unpaid holiday, during which they will receive a monthly allowance of 2,480 yuan ($350).
The other once-solid prospect is Byton, a company set up in 2017 in the east China city of Nanjing by two former BMW veterans, Carsten Breitfeld and Daniel Kirchert.
Byton planned to launch sales of its first product, the M-Byte electric crossover, in China this year and in Europe in late 2021. In January at CES, the company showed the final production version of the M-Byte to its target audience: U.S. consumers.
Yet on June 30, the company suspended normal operations, citing the “great challenges” the coronavirus epidemic has leveled against its financing and manufacturing operations.
In June, another EV startup short of cash, Saleen Auto, closed its office in Shanghai and operations at a plant in the east China city of Nantong.
Many more EV startups are also poised to go belly up.
In contrast to the recovery in the overall Chinese new-vehicle market in recent months, EV demand has yet to rebound from steep cuts to government subsidies in June 2019.
In May, EV deliveries across the country contracted for the 11th straight month, slumping 25 percent to around 64,000.
Facing a double blow from the coronavirus epidemic and shrinking market demand, only five EV startups will likely survive till the end of the year, one expert, Mei Songling, predicted at an industry conference held in the southwest China municipality of Chongqing last month.
Mei joined Shanghai-based EV startup WM Motor as chief digital officer early last year. He was previously managing director at J.D. Power’s China office.
For the dozens of remaining EV startups that boldly participated in the Shanghai auto show last year, it might turn out to be their final show.