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The Shanghai-based carmaker has an annual production capacity of 250,000 units. Photo: Weibo

Chinese EV start-up WM Motor reportedly cuts employees’ pay by up to 50 per cent as it grapples with weak sales

  • The electric car start-up, which is looking to launch an IPO in Hong Kong, trails big domestic rivals in terms of sales
  • It is struggling financially, according to two executives at its supply-chain vendors
WM Motor, a Chinese electric car start-up looking to float initial public offering (IPO) shares on the Hong Kong stock exchange, has reportedly cut staff salaries by up to 50 per cent as weak sales and widening losses exacerbated its financial woes.
The Shanghai-based carmaker, which has an annual production capacity of 250,000 units, slashed senior managers’ wages by half and reduced the salaries of other employees by 30 per cent this month, according to financial media outlet Jiemian. The Shanghai-based business news specialist cited anonymous sources within the company.

WM did not respond to the Post’s queries about the pay cuts.

Two executives with WM’s supply-chain vendors said the company was grappling with financial problems and struggling to sustain its operations because of lacklustre sales in the highly competitive market.

In 2021, it lost 1.95 billion yuan (US$270 million), 68 per cent more than a year earlier.

In the first eight months of this year, the company sold 25,158 vehicles in China, a long way shy of its major home-grown peers.

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Once viewed as a promising electric vehicle (EV) start-up, WM mainly builds battery-powered vehicles priced between 150,000 yuan (US$20,574) and 200,000 yuan, targeting mainland China’s huge population of middle-class motorists.

Its domestic rivals – Xpeng, Li Auto and Nio – assemble smart EVs that are priced above 200,000 yuan and compete against Tesla’s Model 3 and Model Y vehicles.

In June, WM filed an IPO application to the Hong Kong stock exchange. It is not known when its fundraising plan is likely to be implemented.

None of the top Chinese smart-car builders have made a profit so far, as they spend heavily on developing new models.

Chinese EV start-ups are still unprofitable and will have to take a prudent approach in manufacturing and marketing,” said Eric Han, a senior manager at Suolei, a business advisory firm in Shanghai. “In the next three to five years, most of the start-ups are expected to be edged out due to fiercer competition.”
Beijing has distributed more than 300 billion yuan in cash subsidies to EV buyers since 2009, and exempted them from paying a 5 per cent purchase tax until 2023.

The drive to encourage people to ditch their petrol cars has attracted some 200 companies that have invested tens of billions of dollars in developing, designing and assembling electric cars.

Founded in 2015 by Freeman Shen Hui, WM has a manufacturing facility in Wenzhou, in China’s eastern Zhejiang province, equipped with mass customisation capability and a capacity of 100,000 units a year.

Another factory in Huanggang, in central China’s Hubei province, has a capacity of 150,000 cars.

In 2021, WM delivered 44,152 vehicles to mainland customers, more than double the number a year earlier.

In the first eight months of this year, the company sold 25,158 vehicles in China.

The sales numbers lagged far behind Nio, Xpeng and Li Auto, which normally deliver about 10,000 vehicles each in one month.

US carmaker Tesla is the runaway leader in the mainland’s premium EV segment. Its Shanghai-based Gigafactory delivered a record 83,135 units in September.

China, the world’s largest EV market, could see sales of new-energy vehicles – a term encompassing pure electric, plug-in hybrid and fuel-cell cars – more than double to 6 million units this year, according to UBS analyst Paul Gong.

By 2030, three out of every five new vehicles sold in the country will be powered by batteries, the Swiss bank predicted last year.

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