The automotive industry in China, particularly in the new energy sector, is witnessing turbulence, and one notable company facing such challenges is WM Motor, which appears to be navigating a particularly difficult winterThe CEO of WM Motor, Shen Hui, recently issued an internal memo outlining drastic measures aimed at reducing operational costs in response to an apparent cash crunch.

The internal communications reveal a grim picture: employees in Shanghai are now facing wage reductions of 50% to 70%, coupled with the suspension of year-end bonuses and vehicle purchase subsidiesThis radical approach underscores the financial strain that has begun to mount on the company.

As of March 2023, WM Motor had reported cash and cash-equivalents totaling approximately 3.68 billion yuan, which illustrates a precarious financial position, prompting the pressing need for new funding sources to revitalize its liquidityThis urgency is compounded by intensifying competition in the electric vehicle (EV) market, where the tide seems to be turning against the company.

Since its inception in 2015, WM Motor set out to position itself prominently within the new energy vehicle arena, often colloquially referred to as the "new four dragons" alongside rivals like NIO, Xpeng, and Li AutoYet, unlike these competitors who have successfully transitioned to the capital market, WM Motor has faced significant hurdles transitioning from private investment to public listingsAfter a rejection from the Star Market (STAR), the hopes of going public in Hong Kong remain uncertain, with many analysts expressing skepticism about the company's future.

The scope of the salary cuts at WM Motor is quite telling

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The internal memo revealed that management-level executives (M4 and above) would see a 50% salary reduction, while other employees would receive only 70% of their basic salariesIt’s worth noting that companies often resort to such measures as a last resort in times of financial distress.

Compounding these layoffs are challenges within the supply chain, where WM Motor has reported rising raw material costs and delays in delivery that can severely disrupt productionAn employee reached out to the media confirming the receipt of the internal memo, underscoring the pervasive atmosphere of anxiety among staff.

Earlier this year, the company also sought to reduce costs through executive pay cuts, which aimed at addressing financial strain head-onBy 2021, WM Motor had witnessed rapid growth in its workforce, swelling from 2,639 employees in 2019 to 3,952 by 2021, though the burgeoning payroll now raises questions about the sustainability of such expansions in a cooling market.

Financial records show that manufacturing personnel accounted for a significant portion of staff at WM Motor, yet this does not translate directly into fiscal stabilityDespite paying out over 20 million yuan in salaries to manufacturing workers in 2021, the overall business suffered a staggering cumulative loss of 13.6 billion yuan over three years, putting more pressure on the already strained resources.

Despite the mounting financial pressures, executives at WM Motor, led by Shen Hui with an alarming compensation structure that topped 1.2 billion yuan in 2021 alone, have received criticism for their pay amid company losses

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While confounding to stakeholders, such compensations have become a controversial talking point in the public eye, especially considering that Shen's pay structure hinged on performance metrics linked to a successful public listing.

Once a company brimming with ambition to surpass competitors and aim for global dominance in the electric vehicle market, WM Motor’s trajectory has shifted dramaticallyWith initial projections for prosperous growth and dominant market share in 2019, reality has not measured upInfamous incidents of vehicle fires resulting in negative publicity began to unravel public perception, leading to significant recalls.

Moving into the subsequent years, WM Motor's sales figures have stumbled, mirroring the setbacks faced by the companyAs competitors like NIO and Xpeng have surged, boasting sales figures nearing 100,000 units annually by 2021, WM Motor has remained static, with only 44,000 units sold that yearRecently, the bleak sales statistic of just 1,117 units for October 2022 serves as a stark reminder of its declination from the lucrative forefront to the shadows of the market.

Meanwhile, rising stars in the industry like Neta have rocketed to prominence with 109,000 units sold in their third-quarter results in 2022. The consequences of WM Motor’s stagnation are evident: they languish far behind in a highly competitive landscape where innovation, timing, and capital access dictate survival.

Compounding these challenges are the unanswered questions surrounding WM Motor's path to public listingAfter abysmal full-year results which reflected 17.62 billion yuan in revenue in 2019 that elevated to just 47.43 billion yuan in 2021, monthly losses still soared

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