Chinese EV start-up Byton furloughs staff, cuts pay as pandemic casts doubt on first car delivery
- More than 200 workers are affected by the temporary work stoppage at Byton’s research and development base in Santa Clara, California
- Byton’s senior management will collectively take an 80 per cent pay cut and invest in the company’s series C round of fundraising.
Electric vehicle start-up Byton has put hundreds of its team in the US on furlough, following lay-offs in China last year and planned pay cuts, as disruptions caused by the coronavirus pandemic threaten to derail the commercial release of its first car.
Byton initiated the series of cost-reduction measures this week amid efforts to put on track its main operations in Nanjing, capital of eastern coastal Jiangsu province, where production of the M-Byte electric sport utility vehicle (SUV) is based.
More than 200 workers are affected by the temporary work stoppage at Byton’s North American headquarters in Santa Clara, California – a research and development base focused on software design, with about 450 staff. News of that furloughed workforce was first reported on Tuesday by US news website Electrek.
Byton confirmed on Thursday the US furloughs, as well as the pro rata salary deferral, based on seniority, of employees in China. These are part of measures that will help “alleviate the financial pressure” in its operations, according to a company statement.
“Specific arrangements for the start of production are on track, while the launch of M-Byte in the Chinese market is still under evaluation,” a Byton representative said in response to text inquiries asking for comment about the company’s delivery timetable.
There are currently no further plans to cut staff in China after lay-offs made last year, according to the representative. Byton’s Nanjing plant is running at 95 per cent of normal activity after it reopened on February 11, following an extended Lunar New Year break imposed by the Chinese government to help stop the coronavirus outbreak.
The M-Byte was expected to initially release in mainland China, the world’s biggest car market, later this year. That would be followed by the car’s commercial launch in the US and Europe by the second half of 2021.
The M-Byte has raised “enormous interest in Europe”, said Byton founder and chief executive Daniel Kirchert in a statement released in early March. “Out of 65,000 reservations worldwide, 25,000 are in Europe alone,” he said.
Byton’s latest cost-cutting initiatives reflect how much the coronavirus pandemic has upended the global car industry, especially on sales and supply chain. Many governments have put cities on lockdown and imposed stringent travel restrictions to contain the spread of Covid-19, which has caused more than 46,000 deaths worldwide.
Car sales in China fell for the 21st consecutive month in March. First-quarter sales totalled 3.7 million vehicles, down 42 per cent from a year ago, according to data released by the China Association of Automobile Manufacturers.
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“As Covid-19 continues to wreck havoc on the automotive industry and economy, Byton, like its industry peers, is faced with great challenge to push its operation forward,” the company said in its statement. It added that Byton’s senior management will collectively take an 80 per cent pay cut and invest in the company’s upcoming series C round of fundraising.
