Electric-Car Startup Byton Halts Operations for 6 Months Amid Cash Crunch
What’s New: Byton Ltd., an electric-vehicle startup founded by former BMW executives, will suspend all China operations for six months starting July 1, reflecting a capital crunch worsened by the Covid-19 pandemic.
Byton will push forward a restructuring during the suspension, the company said Tuesday. The automaker will furlough most employees and encourage them to resign, an internal letter viewed by Caixin showed. Byton promised to pay staff salaries that have been delayed since March, according to the letter.
The venture attributed its capital woes to the Covid-19 pandemic. Caixin learned that Byton encountered a delay in receiving funds from investors in a Round C fundraising. The company said in September that it secured $500 million from investors including state-owned China FAW Group Corp. Byton is also in a debt dispute with Tianjin FAW Xiali Automobile Co. Ltd.
Background: Byton is a latest upstart suffering troubles in China’s electric car market as the world’s largest auto market slows. Founded in 2016, Byton counts Tencent Holdings Ltd. and Foxconn Technology Group as early investors. The company said last year it was planning to start mass production in late 2019 and enter North America and Europe around mid-2020.
However, the rollout of Byton’s first model M-Byte was postponed to mid-2020 and is likely to be future delayed amid the production halt. Byton has about 1,000 employees in China and about 500 abroad, including in the U.S.
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