Business Difficulties
In February 2024, several Hozon Auto employees broke the news on workplace social media, CEO Zhang Yong's previous promise to pay year-end bonuses in the first week of work was not fulfilled, and he was even told that the payment would be delayed by one month. Zhang Yong later responded that the annual performance payment coefficient and amount are being confirmed, emphasizing that employees' wages, social security and bonuses have never been delayed since 2016. He also said that "a small number of employees in the company are not used to hard times" and "it is necessary to pass on the coldness to everyone."[22]
On October 15, 2024, another employee broke the news that he had not received last month's salary; Hozon Auto responded to the media the next day, saying that the company's front-line employees' salaries were paid on time, but the salary structure of mid- and senior-level employees was being adjusted recently, so the salary of some employees was slightly delayed.[23] At the end of the same month, an online media outlet received information from a Hozon Auto employee that Hozon Auto had begun implementing a salary cut plan for all R&D personnel. The salary cuts for more than 1,000 employees range from 5% to 30%, which should correspond to the earlier "salary structure adjustment".[24] Hozon Auto responded that the salary increase plan is part of the company's goal of achieving positive cash flow as soon as possible. The company also launched a full-staff equity incentive plan, allocating 5% of the shares to all employees as incentives; the company will also implement organizational streamlining, Cutting redundant staff, focusing on business, flattening management and other cost-cutting and efficiency-enhancing measures.[25] On November 7, media reported that Hozon Auto launched a large-scale layoff that day, with the layoff rate reaching up to 70%, but the company denied it.[26]
On November 14, 2024, Hozon Auto told the media that the company is promoting major strategic adjustments, including streamlining its structure and focusing on its core business. To further improve operational efficiency, the company will allocate more resources to overseas market expansion and plans to achieve positive operating cash flow in February 2025. Hozon Auto also announced that it has reached a cooperation agreement with Nanning Industrial Investment Group, which will provide financial support for the company's supply chain.[27] On December 6, Hozon Automobile announced that Zhang Yong would no longer serve as the company's CEO and would become a company consultant; the company's founder and chairman Fang Yunzhou would concurrently serve as CEO. Fang Yunzhou issued an internal letter to all employees on the same day, admitting that the company was in operational difficulties and stating that he "bears the primary responsibility and deeply apologizes to everyone."[28]
In March 2025, Neta Auto proposed at a supplier conference that 70% of its debts would be converted into equity of its parent company Hozon Auto, and the remaining 30% would be repaid in interest-free installments in cash, but this plan was not approved by all suppliers.[29] The company's executives also disclosed at the meeting that in addition to poor management, starting from the second quarter of 2024, the bank withdrew loans from the company's account for two consecutive quarters, resulting in the company's failure to successfully go public and the rupture of the capital chain, which directly caused the operating crisis at the end of the year.[30]
On May 7, industrial robot company Efort announced that Hozon New Energy and its subsidiaries agreed to pay approximately RMB 49 million in arrears in batches, which was interpreted by the outside world as a partial solution to Neta Auto's funding problems;[31] However, a few days later, Hozon New Energy was filed for bankruptcy review by an advertising company.[32] As of June 2025, more than 100 pieces of information on persons subject to execution have been stored, with a total amount of execution exceeding RMB 150 million.[33]
At the end of May, the company's headquarters moved from Shanghai's Putuo District to the Hongqiao Business District; however, on June 12, it was forced to move out of the location and all employees worked from home. On June 13, Hozon New Energy officially entered the bankruptcy review process.[34] On August 11, Hozon New Energy was listed as a "dishonest debtor".[35]
