WM Motor is the latest startup to file for bankruptcy in China’s booming but saturated EV market

After an eight-year run and a reign as one of the highest funded EV startups in all of
China, WM Motor and its brand Weltmeister have filed for bankruptcy. Today’s news puts a bookend on a turbulent year facing financial struggles, but the startup has vowed to restructure through debt collectors and will seek a rebirth.

WM Motor is short for WM Motor Technology Group Company Limited, founded by CEO Freeman Shen in 2015. Shen was a former board member at Chinese automotive conglomerate Geely during its acquisition of Volvo in 2010 and later served as chairman of Volvo in China.

We’ve spotlit WM Motor and its EV brand Weltmeister over the years, as the startup (like many) saw a meteoric rise in hype and funding, before ultimately plummeting in attempt to scale production. In 2020, the startup raised 10 billion yuan (~$1.5 billion) worth of outside investments before taking a unique approach in listing on Shanghai’s Nasdaq-style Star board in 2021 instead of an IPO in New York. A risky move at the time, of which we said as much two years ago:

In choosing the mass market over arguably saturated luxury, WM Motor is taking some risk. However, if it pays off, Weltmeister could quickly jump miles ahead of its competitors in sales based on practicality. This strategy is based on an informed approach from Weltmeister. The company has previously stated that parents with young children make up 69% of its customer base.

Following strains brought on by the pandemic, EV production stumbled and the capital began to dry up. The past year especially, WM Motor has leaned down, implementing salary cuts and layoffs to stay afloat. Despite those efforts, the Chinese startup has officially filed for bankruptcy, but has already vowed to return for another go at it.

WM Motor goes bankrupt, but will restructure

Per a post on its Weibo account today, WM Motor has officially filed for bankruptcy with a court in Shanghai, sharing a document made public on October 9 by the China’s national enterprise bankruptcy information disclosure platform.

On Wiebo, the startup cited the pandemic, a poor capital market, fluctuating raw material prices, and setbacks in further capital acquisitions as reasoning behind the filing but said it hopes to save its business by realigning its strategy and resolving its debt.

To that note, WM Motor has already commenced the restructuring process with a pre-application to the Shanghai No. 3 Intermediate People’s Court. Per the statement:

Through the pre-restructuring process, we will thoroughly review the company’s operations and business model, and optimize each division and business in order to reduce costs, improve efficiency and achieve sustainable development.

Looking ahead, the Chinese startup said it will seek out strategic investors around the world to achieve its “rebirth,” and will continue to consult with creditors and shareholders while it chases that feat. Despite bankruptcy, WM Motor says it will continue to provide customer service to its current EV owners in China. Per the statement:

We will closely monitor market changes and industry trends and continue to improve our products and services with the aim of re-emerging after pre-restructuring.