WIf anyone would be successful with their electric car dreams, it would probably be Ding Lei. Quite a few in China thought so. Before becoming a founder, he was head of SAIC General Motors, the Chinese joint venture between the largest car manufacturers in the USA and the People's Republic. And then he was also excellently connected politically – not an insignificant criterion in China: he was once deputy mayor of Shanghai's most important district, where the skyline, several corporate headquarters and the international airport are located.
But even for Ding things are getting tight. Chinese media report that his Shanghai start-up Hiphi is on the verge of bankruptcy. He gave himself three months to save the company. The sixty-year-old manager is said to have apologized internally, saying he had relied on old-fashioned strategies and could not keep up with the founders of internet companies.
The company didn't even sell 9,000 cars last year, according to Chinese media. Now salaries are being cut or eliminated. Ding is in talks with state-owned auto giant Changan from Chongqing, by some counts the largest city in the world. To the stock exchange's relief, it denied reports that Hiphi would be taken over. It is still unclear whether the Shanghai-based company, like many others, can save itself by jumping under the umbrella of a much larger company.
Hiphi and Ding are the latest example of how mercilessly Darwinism is hitting the auto industry. If you're not good enough, you disappear. In October, the start-up Weltmeister, which had a German brand name but was also based in Shanghai, was hit. Polestar just had to be supported by the parent company Geely.
“Shock” after Apple decision
In the world's largest car market, one price round follows the next. Many smaller electric cars are available for the equivalent of little more than 10,000 euros. Krösus BYD has just tightened the thumbscrews further with the next reductions. Of the more than 60 electric car start-ups in the country, just 17 have stable sales, Chinese media quote Changan boss Wang Jun. According to estimates, the factories in the country could produce twice as many cars every year as are sold.
It is the consequences of a crazy gold rush in which hundreds of companies wanted to become the Chinese Tesla. The boom far exceeded the rapidly increasing demand. In the rest of the world, buyer reluctance is the problem, and ramp-up is slower than many expected. Apple just pulled the plug on its car project. Xiaomi founder Lei Jun wrote on Weibo that he was “shocked” by this news. The Chinese electronics giant is currently demonstrating what its competitor Apple no longer believed in: the first Xiaomi car is expected in a few weeks.
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