Chinese EV Star JiYue Automobile Crumbles: Employee Protests, CEO Under Fire, and the Fall of a Promising EV Giant

JiYue Automobile Faces Sudden Collapse: Employees Expose Chaos Amid CEO Confrontation

JiYue Automobile, a rising star in China's electric vehicle (EV) sector, has abruptly plunged into crisis, leaving thousands of employees and stakeholders in turmoil. The company's sudden unraveling was thrust into the spotlight when multiple Douyin (TikTok) accounts named JiYue Sales Stores initiated distressing live streams across major cities including Chengdu, Hangzhou, Shanghai, and Shenzhen. These broadcasts revealed the company's disarray, with sales personnel disclosing the imminent dissolution of JiYue and the absence of any support for affected employees.

What Happened

On December 12, 2024, JiYue Automobile's registered Douyin accounts began live-streaming distressing updates from sales outlets nationwide. Employees across cities like Chengdu, Hangzhou, Shanghai, and Shenzhen used these platforms to unveil the company's rapid disintegration, stating that JiYue had no plans to provide a window for employees to secure new employment. The live streams, characterized by a "giving up" tone, painted a grim picture of the company's internal struggles.

Simultaneously, JiYue's CEO, Xia Yiping, found himself surrounded by concerned employees at the company's headquarters. Internal broadcasts captured the tense atmosphere as staff members confronted the CEO about the company's dire situation. Earlier that afternoon, Xia Yiping held an internal meeting lasting over an hour, addressing more than 20 employee grievances, including unpaid wages, halted social security contributions, and unclear severance packages. Despite acknowledging the challenges, Xia failed to provide a definitive timeline for resolving these issues, assuring employees that the company was not shutting down but was actively seeking additional financing.

The catalyst for this upheaval emerged on December 10, when reports surfaced that Baidu and Geely, major stakeholders in JiYue Automobile, had ceased further investments. This development signaled the imminent closure of JiYue's vehicle production operations. The following day, Xia Yiping attempted to stabilize the situation through a video conference, outlining a "2.0 entrepreneurship phase" aimed at restructuring the company. However, his assurances did little to quell the growing unrest among employees, who feared the CEO might abandon the company altogether.

Key Takeaways

• Sudden Dissolution: JiYue Automobile announced an immediate cessation of operations, leaving over 3,000 employees without clear compensation.
• Stakeholder Withdrawal: Baidu and Geely, key investors, withdrew further funding, triggering the company's financial collapse.
• Employee Struggles: Employees face unpaid wages, halted social security, and uncertain severance packages amidst the company's disintegration.
• Leadership Controversy: CEO Xia Yiping is criticized for mismanagement and reluctance to step down, exacerbating the crisis.
• Market Implications: JiYue's collapse underscores the intense competition and high failure rate among new entrants in China's EV market.

Deep Analysis

The downfall of JiYue Automobile is a stark reminder of the volatile nature of China's electric vehicle industry. Despite initial optimism fueled by backing from tech giant Baidu and automotive powerhouse Geely, JiYue's trajectory highlights the challenges new entrants face in a saturated and fiercely competitive market.

Financial Mismanagement: Central to JiYue's collapse are severe cash flow issues. The company relied heavily on continuous financing to sustain operations, but the withdrawal of investments from Baidu and Geely left it financially crippled. Delayed salaries, unpaid social security contributions, and unpaid debts to suppliers and media partners are symptomatic of deeper financial mismanagement.

Operational Challenges: JiYue's aggressive market strategies, including frequent discounts and expansive live-streaming campaigns, initially boosted sales but were unsustainable in the long term. The company's reliance on promotional tactics over solid product development and customer satisfaction led to temporary sales spikes that couldn't be maintained without robust financial backing.

Leadership Failures: CEO Xia Yiping's handling of the crisis has been widely criticized. Instead of providing transparent and actionable solutions, his approach has been perceived as evasive and self-preserving. The lack of clear communication and definitive plans for employee compensation has eroded trust and heightened tensions within the company.

Investor Relations: The withdrawal of support from Baidu and Geely underscores the importance of solid investor relations and sustainable business models. Without the continued backing of these major stakeholders, JiYue lacked the financial resilience to navigate market downturns and operational hiccups.

Market Implications: JiYue's failure adds to a growing list of challenges faced by new EV manufacturers in China. The market, while booming, demands not only innovative products but also sound financial strategies and effective management. As the competition intensifies, only companies that can balance rapid growth with sustainable practices will survive.

Did You Know?

• Origins and Evolution: JiYue Automobile was formerly known as Jidu Automobile, jointly backed by Baidu (55%) and Geely (45%). Production qualification issues led to a rebranding, adjusting shareholdings to Baidu 35% and Geely 65%.
• Product Line: JiYue launched its first mass-produced model, the JiYue 01, in October 2023, followed by the JiYue 07 sedan in September 2024. Despite initial sales struggles, aggressive discounting temporarily boosted monthly deliveries to around 1,200 units.
• Marketing Tactics: CEO Xia Yiping attributed recent sales increases to extensive live-streaming and social media engagement, claiming over 1.3 million videos were posted with over 100 million exposures. However, insiders believe that substantial discounts on the JiYue 01 were the primary drivers behind the sales uptick.
• Corporate Structure: Backed by Geely's advanced platforms and Baidu's technological prowess, JiYue aimed to integrate cutting-edge smart driving technologies. Despite this, the company struggled to launch effective autonomous driving features, lagging behind competitors in city navigation capabilities.
• Employee Impact: Over 3,000 JiYue employees face uncertain futures, with many joining multiple advocacy groups seeking fair compensation and transparency from the company’s leadership.

Conclusion

JiYue Automobile's rapid descent from a promising EV newcomer to a company on the brink of collapse serves as a cautionary tale in the high-stakes automotive industry. As the market continues to evolve, the importance of financial prudence, transparent leadership, and sustainable growth strategies becomes ever more apparent. The fallout from JiYue's crisis will undoubtedly influence investor confidence and employee morale across China's burgeoning electric vehicle landscape.