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CHINESE electric vehicle maker Human Horizons Group suspended operations for at least six months, adding to signs of an enduring squeeze in the industry as growth slows.
The Shanghai-based manufacturer of the premium HiPhi brand suspended production on Sunday (Feb 18) and barred workers from entering its factory, said an employee who asked not to be named because they have not been authorised to speak publicly.
Workers will receive January wages at the end of this month, and then salaries will be paid at a 70 per cent rate between Feb 18 and Mar 18, the employee said, citing a memo that had been sent to workers.
After that, they’ll be paid minimum wage. Workers who wish to continue to pay into their national medical insurance plan should resign by Feb 25, the memo said, in a potential sign the firm will face difficulties in continuing to cover social welfare contributions.
After years of rapid growth, the world’s biggest EV market is facing a slowdown as consumer demand wanes and escalating trade tensions hurt the export outlook. That’s pushed a growing number of companies, including WM Motor and the EV division of the embattled real estate developer China Evergrande Group, to the brink of collapse and drawn the ire of senior government officials.
Human Horizons didn’t respond to requests for comment from Bloomberg News and calls to its sales office weren’t answered. They denied on record that operations were suspended to local media outlets including Caixin who had reported the company being in trouble.
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Pressure has been building on Human Horizons, with Chinese media reporting last month that it had closed stores in cities including Guangzhou and Chengdu and hadn’t paid some suppliers on time. Human Horizons said then that it was operating as normal.
Smaller players like Human Horizons are being hit hard by the intense competition, and many are exiting the industry entirely. The number of registered EV producers dropped to 100 last year from roughly 500 in 2019 as subsidies dried up. HiPhi, whose EVs range from 339,000 yuan (S$63,366) to 570,000 yuan, sold fewer than 8,000 vehicles in 2023.
Human Horizons’ financial woes may also cast doubt over a US$5.6 billion deal inked in June last year with Saudi Arabia’s Ministry of Investment to collaborate on development, manufacture and sales of EVs. The agency did not immediately respond to a request for comment from Bloomberg News. BLOOMBERG
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