Cover Story: Baidu-Geely Joint EV Failure Reflects Treacherousness of Chinese Market
Listen to the full version
Ji Yue Auto — an electric vehicle (EV) startup backed by Chinese tech giant Baidu and automotive powerhouse Geely — disbanded overnight, leaving hundreds of employees, suppliers and consumers reeling. What started as a rising star in China’s competitive EV industry collapsed in a single day, triggering industry-wide alarm and raising questions about how a company with such formidable backers could meet such a sudden and dramatic end.
Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.
Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.
- RELATED
- DIGEST HUB
Digest Hub
Back
- Ji Yue Auto, an EV startup backed by Baidu and Geely, abruptly collapsed, affecting employees, suppliers, and consumers, highlighting challenges in China's competitive EV market despite strong backing.
- The company faced financial strain with cumulative losses of 7 billion yuan and delivered only 14,000 units by 2024 despite launching two models and securing initial investment support.
- Internal mismanagement, licensing issues, and a price war in China's NEV market compounded Ji Yue's difficulties, leading Baidu and Geely to reconsider their focus and support.
Ji Yue Auto, an electric vehicle (EV) startup backed by Baidu and Geely, disbanded overnight, leaving employees, suppliers, and consumers in shock. Despite rapid expansion, a video call by CEO Xia Yiping on December 11 revealed unpaid employee benefits and a grim ultimatum, marking the company's end. The collapse highlights the challenges of China's competitive EV market, even for startups with strong investors. [para. 1]
Ji Yue, originally Jidu Auto, launched in March 2021 with Baidu holding 55% stake and Geely 45%. Despite potential, Ji Yue faced a licensing hurdle, delaying its first model's production. By 2024, the company's finances were strained with lenders refusing to renew credit lines, leading to liquidity issues and eventual shutdown. Baidu and Geely initially pledged a 50 billion yuan investment but contributed far less. Ji Yue's cumulative losses reached 7 billion yuan, including significant supplier debts, despite launching two vehicle models. [para. 4][para. 6]
The company's abrupt decline left car owners, suppliers, and creditors scrambling. Over 1,000 unsold cars were seized, and car owners protested at Baidu and Geely offices for clarity on services and promised updates. [para. 6]
Jidu Auto positioned itself as a trailblazer, branding its cars as "robots on wheels." However, regulatory challenges and a focus on innovation over practicality led to operational missteps. A licensing issue stalled its ROBO-01 model, forcing it to use Geely's manufacturing credentials. Despite initial high pricing, sales lagged behind competitors, resulting in a price cut and consumer distrust. Internal mismanagement, chaotic management, and frequent personnel changes further weakened the company. Financial strains continued, with incentives unable to mitigate losses. [para. 13][para. 14]
Baidu aimed to showcase smart driving tech through Ji Yue but struggled with regulatory hurdles. Competitors like Huawei intensified pressure, and Baidu shifted focus towards AI, sidelining automotive ambitions. Executive departures and aroused uncertainties within Ji Yue, leaving Baidu with unmet debts and a significant setback in smart driving exploration. [para. 22][para. 24]
Geely's involvement was "hands-off," focusing on steady revenue. Despite being the largest supplier, it offered limited support, extending payment terms and becoming Ji Yue's largest creditor. However, with broader consolidation efforts, Geely shifted focus from Ji Yue to other brands with higher potential. [para. 28][para. 30]
Ji Yue's rise and fall mirrored China's booming EV market from 2021, paralleling launches like Geely's Zeekr and Xiaomi's automotive division. The withdrawal of national subsidies and price wars led many startups to collapse. While some automakers secured strategic investments, others, including Ji Yue, faced financial crises. This affected the supply chain and resulted in several bankruptcies. [para. 33][para. 39]
- Ji Yue Auto
- Ji Yue Auto, an EV startup backed by Baidu and Geely, abruptly disbanded, affecting employees, suppliers, and consumers. Despite initial potential and significant backing, the company faced financial strains, regulatory and operational challenges, and a competitive market. Ji Yue's collapse highlights the pressures on new entrants in China's EV industry amidst a prolonged price war and the withdrawal of national subsidies. The company's downfall has broader implications for the industry and its supply chain.
- Baidu
- Baidu backed Ji Yue Auto with a 55% stake, leveraging its autonomous driving and AI expertise. Challenges included securing a manufacturing license and shifting focus to AI developments like Apollo Go due to competition from Huawei. Despite initial promises, Baidu only invested 5 billion yuan, leaving Ji Yue with substantial debts. The company later deprioritized its automotive ambitions in favor of AI and cloud computing, significantly impacting Ji Yue's operations and leading to its collapse.
- Geely
- Geely was a joint shareholder in Ji Yue and its largest supplier, involved in hardware development, production, and procurement using its Zeekr electric vehicle platform. Although it extended payment terms and provided limited support, Geely's strategic focus shifted towards consolidating existing brands like Zeekr. Geely employed a multi-brand strategy and sold 487,500 NEVs in 2023. Despite being Ji Yue's largest creditor, Geely ultimately deprioritized Ji Yue due to low sales compared to other brands.
- Xiaomi Auto
- Xiaomi Auto emerged as a strong competitor in China's EV market, with monthly sales topping 20,000 vehicles, significantly outperforming Ji Yue, which peaked at 3,107 units. Despite challenges in the industry, Xiaomi Auto has managed to achieve higher sales figures, positioning itself as a more successful contender among new automotive brands. The article underlines Xiaomi Auto's market success compared to the now-defunct Ji Yue Auto.
- Li Auto
- Li Auto, a competitor in China's EV market, surpassed monthly sales of 50,000 vehicles, significantly outpacing Ji Yue's peak sales of 3,107 units in October. Li Auto, alongside competitors like Xiaomi Auto and other Chinese manufacturers, benefited from strategic investments and strong market performance, contrasting with Ji Yue's struggles with financial issues, licensing hurdles, and market competition.
- Tesla
- Tesla delivered 140,000 Model 3 vehicles in China in 2020. Early 2023 saw Tesla initiate price cuts, sparking a prolonged price war affecting industry margins. Despite challenges, Tesla employed strategies like discounts and five-year interest-free loans to sustain sales. The company's promotional tactics are part of a broader trend among major automakers to maintain competitiveness amid declining subsidies and intense market competition.
- HiPhi
- HiPhi, a brand in China's EV industry, faced severe financial crises amid the competitive market pressures and price wars. The downfall of multiple EV startups, including HiPhi, impacted the supply chain, leaving suppliers struggling. The prolonged price battles following Tesla's cuts and the end of national subsidies for NEVs have strained new automakers like HiPhi, contributing to their financial difficulties.
- Neta
- Neta, one of the automotive brands mentioned, is facing a severe financial crisis amid the challenging environment in China's NEV market. The ongoing price war, intensified by Tesla's price cuts and the end of national NEV subsidies, has strained many automakers, including Neta, leading to difficulties in sustaining margins and operational viability.
- NIO
- The article mentions NIO as one of the Chinese automakers that secured strategic investments from global players like CYVN Holdings, positioning it among successful EV manufacturers amid challenges faced by newcomers in the industry.
- XPeng
- XPeng secured strategic investments from global players, such as CYVN Holdings, amidst the turmoil affecting the EV industry. The company benefited from the challenges faced by other automakers, exemplified by its acquisition of assets from Didi's abandoned EV project.
- Leapmotor
- The article mentions that Chinese automaker Leapmotor has secured strategic investments from global players like CYVN Holdings, particularly in the context of multiple EV startups collapsing and the challenging market conditions facing traditional automotive giants.
- Volkswagen
- Volkswagen is facing challenges with declining sales and profits, leading the company to announce plans for factory closures and job cuts. Additionally, the automotive giant is dealing with the industry's prolonged price war and has seen its operations affected by the collapse of multiple EV startups like Ji Yue.
- Huawei
- Huawei aggressively entered the smart driving space, intensifying competition with Baidu, which struggled to match Huawei's expertise and partnership network. This entry coincided with Jidu Auto's struggles and Baidu's shift toward artificial intelligence. Huawei's involvement did not directly influence Ji Yue's downfall but was part of the broader competitive environment in the EV industry.
- BYD
- The article mentions that despite Geely's sales being 1.8 times that of BYD in 2021, by 2024 Geely's sales were only half of BYD's, highlighting BYD's strong performance and growth in vehicle sales.
- Volvo
- The article mentions Volvo as part of Geely's diversified portfolio, which spans luxury brands to budget-friendly NEVs. Geely's strategy includes platform-based development to reduce inefficiencies across its brands, including Volvo and others like Lotus and Lynk & Co. This approach is part of Geely's broader efforts to manage its varied offerings in the competitive automotive market.
- Lotus
- Lotus is mentioned as part of Geely's diversified portfolio of brands, spanning from luxury to budget-friendly NEVs. This includes luxury brands such as Volvo and Lotus, which cover a wide range of prices and vehicle types in Geely's multi-brand strategy aimed at reducing inefficiencies.
- March 2021：
- Ji Yue's predecessor, Jidu Auto, was established with Baidu and Geely as partners
- April 2022：
- The company planned to unveil its first prototype, ROBO-01, at the Beijing Auto Show, but the event was postponed due to the COVID-19 pandemic
- October 2022：
- Jidu launched the vehicle ROBO-01 for 399,800 yuan
- October 2023：
- Ji Yue launched its first model
- September 2024：
- Ji Yue postponed the development of a third SUV model in favor of an upgraded version of the 07
- PODCAST
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新