Neta Auto, the Chinese electric vehicle manufacturer, has removed its logo from the Shanghai headquarters building, with company representatives citing an expired lease and planned relocation. The logo removal, which included signage from the headquarters’ experience center, was first reported by Anhui Daily on May 29.
Failed Debt-for-Equity Swap Compounds Financial Woes
According to 21st Century Business Herald, Neta Auto’s proposed debt-for-equity swap plan has collapsed. The company reportedly owes suppliers approximately 6 billion yuan ($827 million), with investors willing to provide new funding only if half the debt (3 billion yuan) could be resolved. However, suppliers only agreed to convert about 2 billion yuan of debt, leaving a significant shortfall.
Sources close to the matter revealed that certain investors are willing to continue supporting Neta Auto but demand the removal of founder and CEO Fang Yunzhou. On May 13, Fang’s equity holdings in Neta’s parent company, Hozon New Energy Automobile, were frozen for 20 million yuan.
Former CEO’s Assets Frozen Amid Leadership Shakeup
Corporate records show that former Neta CEO Zhang Yong, along with two other executives from Tongxiang Hechuang Delisan Technology Consulting, had their equity holdings frozen in May. Zhang’s 40.5 million yuan stake was frozen on May 13, with the freeze lasting until 2028.
Zhang, who stepped down as CEO in December 2023 to become a company advisor, recently denied rumors of his departure in a social media post, stating he remains active in fundraising efforts for Neta Auto.
Mounting Losses and Operational Challenges
Neta Auto’s financial troubles became apparent in early 2024, with the company reporting 28.37 billion yuan in cash against 43.17 billion yuan in short-term debt at the end of 2023. The company’s Hong Kong IPO filing revealed staggering losses of over 18 billion yuan from 2021 to 2023.
The financial strain has led to significant cost-cutting measures, including layoffs, salary reductions, and departmental consolidation. In January 2024, the company claimed to have reduced monthly operating expenses by more than 70% through restructuring efforts.
Company Maintains Operations Amid Speculation
Despite rumors of research team dissolution in March, Neta Auto continues operations while optimizing organizational structure. The company has threatened legal action against what it calls “false information” damaging its reputation.
As Neta Auto navigates these challenges, the EV market watches closely to see if the company can secure the necessary funding to continue operations in China’s increasingly competitive electric vehicle sector.
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