Shanghai firm sues to liquidate Hozon amid EV maker's financial struggles
The cutthroat competition in mainland China's electric vehicle (EV) market threatens to sink Hozon New Energy Automobile, as the maker of Neta-branded cars faces a lawsuit from a Shanghai-based advertising agency that wants the debt-ridden company to be liquidated.
According to a document recently published on the National Enterprise Bankruptcy Information Disclosure Platform, a court in Jiaxing, in eastern China's Zhejiang province, is reviewing the bankruptcy case after Shanghai Yuxing Advertising filed a lawsuit against the EV maker for non-payment of dues.
'An increasing number of carmakers are facing a financial squeeze because of intense competition,' said Gao Shen, an independent analyst in Shanghai. 'Hozon's crisis has exacerbated a bearish sentiment surrounding the Chinese EV sector.'
More than a dozen Chinese EV start-ups have collapsed over the past five years in a market crowded with more than 50 assemblers, which include
WM Motor , Human Horizons, Jiyue and Byton.
Only half of the nation's EV production capacity, or 20 million units, was put to use in 2024, according to Goldman Sachs.
Hozon said in a statement last week that it had begun a reorganisation process. An official with the Shanghai-based carmaker, who asked not to be identified because of the sensitivity of the issue, said the company had several restructuring options, but none could ensure a successful bailout.
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