EV startup Byton misses payroll as bankruptcy threatens

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Byton Ltd., a formerly thriving Chinese electric vehicle startup, missed payments to workers and shut down production lines when a local court opened bankruptcy hearings.

A court in Nanjing, Jiangsu province, held a hearing on Monday at the request of Shanghai Huaxun Network System Co., a creditor of Byton. Shanghai Huaxun has filed for bankruptcy for Nanjing Zhixing New Energy Vehicle Technology Development Co., Byton’s main business unit.

According to a person close to the company, Byton has put workers’ payrolls on hold while the factories shut down. Byton, which unveiled its first M-Byte concept vehicle in 2018, has yet to commence commercial production originally planned for 2019, Person said.

Byton did not immediately respond to a request for comment on the bankruptcy case and its recent business problems.

Founded in 2016 by former executives from BMW and Nissan Motor, Byton is part of a group of Chinese startups that entered the emerging sector of new energy vehicles when the central and local governments offered generous subsidies. The closely held automaker, originally Future Mobility Corp. called, had early investors like Foxconn Technology Group and tech giant Tencent Holdings Ltd. The Nanjing City Government’s investment vehicle owned 19.4% of Zhixing New Energy.

In 2017, Future Mobility officially acquired the Byton brand name shortly after securing $ 240 million in funding from retail giant Suning and Fullshare Holdings.

In 2018, the state-owned China FAW Group spearheaded Byton’s $ 500 million B round of funding and signed a collaborative framework for collaboration in areas such as component purchasing, platform technology, and investment. In September 2018, Byton acquired an FAW unit for 850 million yuan ($ 133 million) for an automobile manufacturing license.

Byton’s capital stress emerged in September 2019 when it failed to complete a round of funding led by FAW. A management overhaul and the Covid-19 pandemic exacerbated Byton’s problems in 2020. The enterprise exposed all domestic companies and employees on leave in July of last year. Former CEO Daniel Kirchert left the company and joined Evergrande’s EV unit shortly thereafter.

“It will likely be very difficult for Byton to revive,” said a person close to the company. Byton’s main research and development unit was abroad at high cost, which required large new investments to revive production.

The enterprise requested for registration launched a new tech company named Shengteng in September 2020. It planned to raise 2 billion yuan ($ 289 million) from FAW and the Nanjing City Government Investment Vehicle to accelerate mass production of the M-Byte electric SUV.

A new lifeline appeared in January of that year after Byton suffered a blow strategic cooperation Deal with Apple Inc. supplier Foxconn. Mass production of the M-Byte was planned for 2022.

While Byton’s survival depends on funding from FAW, the Nanjing government or Foxconn, the three parties may have lost interest, according to people familiar with the matter. FAW is fully committed to converting its flagship brand Red Flag to electric vehicles by 2030. Foxconn has withdrawn from its investment after several months of due diligence. The government of Nanjing, which once helped Byton with payroll, stopped helping for two months.

As of June 2020, Byton employed about 1,000 people in China and about 500 elsewhere, including the United States

Byton is also facing new competitors in the electric vehicle market as competition has intensified compared to a few years ago. Domestic startups Nio Inc., Li Auto Inc., and Xpeng Inc. debuted on the US stock market, while tech giants from Baidu Inc. to Xiaomi Inc. poured billions of dollars into their own electric vehicle companies.

Contact editorial staff Han Wei ([email protected]) and Bob Simison ([email protected])

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