This news comes after Neta had appeared to be rising from the dead after a significant cash infusion.
Update: Neta Auto has just released a statement claiming that reports of it axing its entire R&D division are false, but did acknowledge that it is implementing organisational changes to enhance cost efficiency. The company also indicated it may take legal action against those spreading false information that harms its reputation.
So a little while ago, it was reported that Neta Auto was to be in some deep financial doo-doo. And while it was then known for the troubled Chinese automaker to have secured some sort of financial lifeline, it appears now that rope wasn’t exactly long enough…
Such is because according to Chinese media outlet Leiphone, Neta Auto had just pulled the plug on its entire research and development department due to its escalating financial problems. This move involved N+1 severance packages for employees who signed termination papers this week, with sources indicating that approximately 200 of the automaker’s 1,700 staff have already begun leaving.
This latest dramatic workforce reduction coincides with the company implementing significant salary reductions for its staff, with remaining employees facing a 75% cut from their pre-October 2023 levels. Some departing employees are currently receiving only Shanghai’s minimum wage, while some who left previously in late 2023 allegedly have not received their promised compensation yet.
Last November, there were rumours that Neta Auto was on the verge of bankruptcy. The troubled Chinese automaker, however, then reportedly obtained 6 billion yuan (RM 3.7 billion) in investments from various state-owned assets earlier this year, with battery maker CATL alleged to have participated in the financing as well.
The automaker is apparently also currently undertaking financing talks with a foreign sovereign wealth fund in its bid to stave off imminent financial ruin. Company insiders, however, suggest Neta’s debt could be as high as 10 billion yuan (RM 6.13 billion), raising concerns about the company’s recovery possibility.
Insiders attribute Neta’s current financial woes partly to the former CEO’s strategy, which heavily favored B2B channels and neglected other areas. Founder Fang Yunzhou, who has now returned as CEO, has outlined reforms focusing on overseas markets and profitable products.
Neta Auto’s Shanghai headquarters has become a focal point for protesting suppliers demanding overdue payments. Local media reports indicate that suppliers have been gathering outside the premises to demand payment, with some even sleeping on the floor of the building.
According to China EV DataTracker, its January sales in China pretty much collapsed, with a drop of 98% year-on-year. In February, on the other hand, it sold fewer than 400 cars in the world’s largest auto market.
Back home in Malaysia meanwhile, Neta currently has two models in its local lineup – the V hatchback and the X crossover. A not-so-grand total of 9 Netas were delivered nationwide in January, with that number dropping to 7 in the following month.
In ending on an interesting side note here, Neta Auto shares its name with the protagonist of this year’s popular Chinese animated film “Nezha 2.” The automaker’s fortunes, however, have proven far less favourable than the film’s, with the latter currently the 5th highest-grossing movie of all time at the international box office.
