Chinese EV startup HiPhi hits financial trouble

The influx of new Chinese automakers is posing a challenge to every established carmaker out there. However, we all know that too much competition can also create a case of “survival of the fittest”.

That couldn’t be more evident with what is happening to the world’s largest EV market – China. With more than 100 EV brands vying for a market share, domestic carmakers at PRC, especially startups with tight financial margins, are finding it extremely hard to stay afloat.

Last year, the most notable brand that filed for bankruptcy was WM Motor. This year, Human Horizons, the parent company of luxury EV brand HiPhi, has entered a restructuring process, following a long period of financial struggles.

HiPhi was established in 2017 as a luxury EV brand that offers three models – the Z sedan, as well as the X and Y SUVs. However, due to the fierce competition in China, the brand struggled with sales and operational challenges.

According to CarNewsChina, HiPhi had already suspended its production operations since February 2024 after falling short of reaching 8,000 unit deliveries in the previous year. The company promised to pay employees for a few weeks before downgrading their salary to the minimum wage.

Various takeover deals were explored with brands like Changan-owned Avatr, the FAW, the iAuto Group, and even investors from Saudi Arabia. However, the future still remains uncertain as the Yancheng Economic and Technological Development Zone People’s Court had just accepted the pre-reorganization application this month. This restructuring phase is seen as a last-ditch effort for HiPhi to avoid complete bankruptcy.

Financial analysts have previously claimed that if the price war in China continues, only 1 in 7 EV firms will remain profitable by the end of the decade.