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A Reminder That China’s Electric Car Companies Are Not Invincible

China’s HiPhi is shutting down of its factory for six months while it searches for a way to financial solvency. Is this the end for the futuristic EV startup?

HiPhi Z Top HiPhi Z Top

As BYD and Geely both jock for EV world domination, it can be easy to assume that all Chinese EV manufacturers are similarly destined for greatness. Actually, the truth is a bit more mixed. Big players like those two are doing well, but China’s many, many smaller brands are facing some of the same profitability issues and lackluster sales that face any other EV startup elsewhere in the world.

Take Human Horizons, commonly known as HiPhi Auto, for example. It’s not doing so hot. As of right now, the company is shut down for at least six months, and rumors are swirling if it’ll be purchased and resume production. 

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Not every Chinese EV manufacturer is doing well

BYD and Geely are selling strongly, but not every EV manufacturer is doing well. HiPhi, Chinese a high-end EV manufacturer that also sells in Europe, announced it is stopping production for six months as it has run out of capital to continue on. Chinese automakers are suffering from the same issues with profitability that affect other brands outside of that country. 

For those not in the know, HiPhi is a high-end Chinese EV maker. Currently, it produces the HiPhi Z and HiPhi X, two crossover-esque vehicles that wouldn’t look out of place as a car in Cyberpunk 2077. HiPhi has even started to venture outside of China, selling its high-end EV in parts of European markets. It has also started to venture downmarket with the HiPhi Y, a $48,000 EV crossover aimed slightly above the Tesla Model Y.

The HiPhi Y went on sale in China in mid-July 2023, with plans to eventually sell the cheaper car in Europe alongside its higher-priced models.

Unfortunately, it’s not clear if that’ll ever happen. Initially, there were rumblings on Chinese social media about unpaid salaries and canceled year-end employee bonuses in January. But on Feb. 18, the company announced that it was reducing everyone’s salaries to the minimum required by Beijing law, shutting down its factory, and suspending production for six months. 

Certainly, this isn’t a great look for HiPhi. But it would be one of the latest startup Chinese EV brands to close up shop.

Byton, a company that promised to bring US drivers a sleek EV SUV, did a six-month furlough in April 2020 only to officially die in 2021. Levdeo, which made the Letin Mengo, failed in May. Weltmeister (aka WM Motor), a brand that was one of the first to the EV crossover craze and even outsold the Tesla Model Y for a split second in time, has yet to rise from the post-bankruptcy restructuring phase that it entered in October.

With that in mind, HiPhi’s break doesn’t necessarily mean the brand is completely doomed, though. Somehow, the brand Hengchi, the EV arm of infamous (and now infamously troubled) Chinese real estate company Evergrande, managed to get its EV crossover back in production after a months-long shutdown. The tooling for Niutron, the EV brand made by electric scooter maker Niu, was ported to one of its manufacturers and renamed to the Docan V07, although it’s not entirely clear if the car has ever gone officially on sale.

Of course, we can’t forget Faraday Future, a brand that has gone through several similar furloughs and layoffs, yet somehow continues to cheat death.

All of this comes at a time when China’s once-unstoppable economy is slowing down, or at least normalizing after a period of massive growth. Sales of homes and cars—two important measurements for the health of any economy—have been slowing for a while, for various reasons. It looks to be entering a nasty real estate crisis. And a lot of the government subsidies that drove EV adoption are winding down there, too. 

None of this is to say that Western and other Asian markets can underestimate China. They already have, and look where that got them. But it helps to remember this country and its car business have significant headwinds of their own. 

As for HiPhi, it’s trying to figure out a way to make itself profitable, or at the very least figure out a way to inject its pocketbook with cash. According to reporting from CarNewsChina, the brand is seeking a suitor, as well as looking for a way to reduce some of its financial burdens. Some have speculated the prospects of several companies, anyone from Huawei to Changan.

There has been no official news from HiPhi if there is a deal on the table, but Reportedly, HiPhi CEO Ding Lei has confirmed that he has met with Changan at its HQ in Chongquing. 

It would no doubt be kind of sad if this was the end of HiPhi. Editor-in-Chief Patrick George saw a Z in person in Europe last year, and he said “It looks like a cross between a Nissan GT-R and a Gundam, and I mean that as the highest possible compliment.” The HiPhi Z has more than 600 horsepower and could scoot to 60 MPH in less than four seconds, so it certainly had the performance chops to play with the big boys. It even outperformed EV models from established brands in a recent cold weather test.

But as we’re seeing with China, great tech alone isn’t enough to make you a winner in a very, very crowded market. Couple that with high interest rates globally and markets that are increasingly wary of exports from China, plus China’s own economic troubles, and their road to dominance is far from straightforward. 

It may even buy some time for the rest of the world to catch up—that is, if they’re down to try

Contact the author: kevin.williams@insideevs.com



This article was originally published by a insideevs.com . Read the Original article here. .

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