On March 7, WM Motor, an electric vehicle maker in China currently caught up in a mounting capital crisis, announced through its social media outlets that more than 100 stores in China will resume normal services in the near future.
WM Motor said that in view of the inconvenience caused by tight supply chains, the company has contacted its production department, distribution department, spare parts storage and distribution platforms to meet the needs of users as soon as possible.
“This is a promising new track. Strategy, speed and strength are the tools at this stage, and they are also the confidence that we are not afraid of the cold winter at the moment.” In April 2019, Freeman Shen, founder of WM Motor, further warned, “Many electric vehicle makers will not survive 2019”. That year, WM Motor achieved some good results, with an annual sales volume second only to NIO.
At the beginning of September, 2020, WM Motor secured a huge financing deal worth 10 billion yuan ($1.44 billion). To date, twelve rounds of financing worth 35 billion yuan have been completed since its establishment. However, the bright moments passed quickly as pressure on WM Motor’s capital chain first appeared in 2021. The company did not launch any new vehicle throughout 2022 and its M7 model, originally planned to be released in last year, has been delayed. In Beijing, almost all of WM Motor’s offline stores were closed, and nearly half of the exhibition halls in Shanghai were closed. Some suppliers with whom WM Motor had fallen into arrears stopped supplying parts to the company while some logistics partners are now suing the company.
This year, WM Motor was caught up in salary reductions, layoffs and debt. As WM Motor began to default on employees’ wages, a large number of employees pulled banners into its factory in Hubei Province to ask for wages. On February 24, WM Motor stated that each department had determined the list of personnel who resumed work, and the rest of employees were forced to take unpaid leave. This move was regarded as a disguised layoff.
In an interview with China Entrepreneur, Freeman Shen confessed that he didn’t make outstanding enough products to attract users. “Since its establishment, WM Motor has wanted to build cars that everyone likes, such as Volkswagen and Toyota, but the cars of these brands are relatively mediocre. In the long run, WM Motor’s intelligence has not become its core advantage.”
Unlike William Li, He Xiaopeng and Li Xiang, founders of NIO, XPeng and Li Auto, Freeman Shen lacks the experience of starting a business and leading a company to go public. Shen, with experience in automobile manufacturing, discovered the tide of the EV-making at a very early stage, but was overtaken by rivals.
Financial problems still present WM Motor with an uncertain future. According to its prospectus, at the end of March 2022, WM Motor had long-term loans of 6.67 billion yuan and short-term loans of 2.28 billion yuan. In April, the company borrowed two more loans from the bank, totaling 1 billion yuan, which needed to be repaid within two years. But there are some positive signs. At the end of last year, WM Motor’s subsidiary added a new shareholder, and its registered capital increased from 170 million yuan to 520 million yuan. The company is also now planning to go public through Apollo, a Hong Kong-listed company, but there is still some uncertainty surrounding the possible listing.