Chinese electric vehicle startup WM Motor Technology Company Limited is slashing staff payments to a whopping degree as it tries to overcome a challenging financial period.
According to China Business News, the Shanghai-based car producer is paying top executives above the vice president only 50% of their base salary. For other workers, their salary is reduced by 30%. The company is also skipping 13th-month pay, 14th-month pay, year-end bonuses, and pausing car purchase subsidies.
An internal letter allegedly from WM Motor CEO Shen Hui has been flying about online. Its issue date is November 21. The letter explains that the company is in a financial crisis and is grappling with streamlining operating expenses. One WM employee confirmed with mainland outlet Yicai.com that they received the letter.
A WM employee told the Times Weekly that the pay cut was implemented in October. Another said he had recently resigned because of the salary reduction, adding that the company’s personnel structure changes daily.
WM Motor used to be among China’s elite group of brand-new domestic automakers. In 2019, it was one of the four new automobile manufacturers with sales surpassing 10,000 vehicles.
But in the list of new energy manufacturers released this October by the Passenger Association, the firm has fallen out from the top 15. It only sold 1,117 vehicles, lagging far behind the fourth-ranking firm GAC Asia, which sold more than 30,000 units.
It has been challenging for WM’s gross profit to turn positive due to the slow rise in sales volume and the increasing cost of new energy cars. According to China Business News, the firm’s gross profit margins were -58.3%, -43.5%, and -41.1%, respectively, between 2019 and 2021.
Chinese auto analyst Ling Ran told the Times Weekly that WM fell from grace because of various factors, including lack of innovation, product quality, delays in manufacturing, unstable market demand, insufficient supply from suppliers, and chip issues.
The company has launched several models over the past years, but there has yet to be much improvement. For example, the 2022 EX5-Z launched in September, which Times Weekly says has no significant difference in terms of battery life, appearance, and configuration.
Competition in the mainland has also become intense, with more newcomers such as Ideal, Nezha, and Leapao gaining market share.
Ran says WM is an example of various problems that a modern new energy manufacturing enterprise may encounter.