Chinese luxury electric car manufacturer, Human Horizons, has become the latest victim of the competitive market and has been forced to temporarily halt car production amidst a capital crisis.
According to Jiemian, a Chinese finance-focused newspaper, on February 18, 2024, the Shanghai-based company announced to its employees that they would stop production for six months for the HiPhi luxury electric car brand. The decision takes immediate effect.
Two sources familiar with the operations of electric vehicle manufacturers said the company was unable to pay its employees in January 2024. The decision to stop assembling expensive cars priced above $80,000 follows Human Horizons’ inability to turn the business around in a market slowdown and may force smaller automakers to shut down.
“This crisis of HiPhi adds to the negative sentiment about Chinese electric vehicle operations,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a consulting firm. “Many smaller companies will have to cease their operations as competition intensifies.”
Human Horizons declined to comment on the issue. The company gained global recognition last summer when it agreed to establish a $5.6 billion joint venture with the Saudi Arabian Ministry of Investment to conduct research, development, production, and sales of cars in the Middle Eastern country.
It is unclear whether the company’s issues in China will affect its business operations in Saudi Arabia. The joint venture in the Middle Eastern country has not yet commenced operations.
Ding Lei, founder and CEO of Human Horizons, told local media in 2022 that the company employed over 5,000 people. In October 2023, Human Horizons denied rumors that they would cut 20% of their workforce and stated that their operations were normal.
Founded in 2017, HiPhi currently produces and sells three models of cars in China. HiPhi does not disclose delivery data. However, according to data from the China Passenger Car Association (CPCA), the brand is not among the top 15 electric vehicle manufacturers in China in terms of monthly sales.
According to CPCA, electric vehicle manufacturers sold 8.9 million vehicles in China last year, a 37% increase compared to the same period the previous year. However, according to Fitch Ratings’ forecast in November 2023, electric vehicle sales in the country could slow to a 20% growth this year.
China is the largest automobile market in the world, both overall and for electric vehicles. Battery-powered cars account for about 60% of global sales volume in this market. However, only a few electric vehicle manufacturers such as BYD and Li Auto are profitable.
According to China Business News’ calculations in September 2023, at least 15 startups with an annual production capacity of 10 million vehicles have either collapsed or are on the verge of bankruptcy as stronger rivals dominate the market. This figure exceeds the 8.9 million electric vehicles sold in China in 2023.
In October 2023, WM Motor, a Chinese electric vehicle startup once seen as a potential rival to Tesla, applied for bankruptcy to the Shanghai High People’s Court. It normally takes six months before a Chinese court makes a ruling on a bankruptcy case.
In an official post on the Weibo social network on October 10, 2023, WM stated that they were still aiming for a revival if supported by strategic investors from around the world.
