In the world of electric vehicles, a company once celebrated as a rising star finds itself in the eye of a stormThe recent events surrounding Geely's electric car venture, Jiyue, have sent shockwaves through the industry, signaling the challenges that many automotive firms face amidst fierce competition and financial pressures.

On December 12, a multitude of Jiyue employees congregated outside the office of CEO Xia Yiping, their faces reflecting a mix of confusion and despairThe walls around them bore motivational slogans that now felt hollow and ironic in light of the company's turmoilThe atmosphere was further charged by the presence of nearly a hundred suppliers, many of whom were facing financial hardships due to outstanding dues ranging from hundreds of thousands to hundreds of millions.

One supplier from Wuhu, Anhui, described their predicament, revealing a staggering 100 million yuan owed by Jiyue

"The company's legal team consists of over forty specialists working on this issue, but no solutions have emerged," he lamentedAs the year drew to a close, pressure mounted on many small businesses relying on these payments for labor costs, highlighting the ripple effects of Jiyue's financial mismanagement.

Meanwhile, the entrance of Jiyue's headquarters was flanked by police cars, indicative of the rising tensionsDuring an appearance at the office, Xia Yiping promised to resolve the issues, yet he failed to provide specific plans or timelines, leading many to doubt his leadershipEmployees presented a list of 18 demands, calling for resolution from both Xia and the shareholders.

Jiyue’s journey began with optimism—its first vehicle launched in August 2023 with substantial backing from tech giants Baidu and auto manufacturer Geely

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The collaboration was seen as a dream team in the electric vehicle sector, positioning Jiyue on a pedestal amongst new industry players.

However, the stark transformation from a promising enterprise to a struggling entity raises questions about what went wrongPlacing the blame solely on stakeholders misses the broader issues at playThe company operates as a limited liability entity, meaning shareholders are only obligated to the amount they have invested, allowing them to sidestep the more serious repercussions of a financial collapse.

Xia's bewildering statement—that he is not the primary responsible party—highlights a concerning mindset within the leadershipIn times of crisis, strong leadership is crucial; a CEO should embody accountability rather than deflecting it

Moreover, although Geely and Baidu stepped in to address employee social security contributions, the responsibility for employee compensation ultimately lies with Jiyue as a corporate entity.

Seen from the shareholder perspective, Geely and Baidu were practically forced to intervene and halt further investments, a decision viewed as prudent amid financial turmoilIndustry insiders pointed out that Geely primarily provided platform and technical support to Jiyue, yet the latter's mounting debts in payments owed to Geely complicated the situation.

Jiyue's sudden collapse caught many off guard, yet analysis suggests that the core issue lies in its inadequate revenue generation abilityFinancial reports revealed staggering losses, with predictions suggesting a financial shortfall of 7 billion yuan

The alarming figure was initially misinterpreted by potential investors as liabilities rather than expected operating losses for the upcoming year, casting a shadow over Jiyue's fiscal landscape.

During its relatively brief existence, Jiyue has delivered only two models—Jiyue 01 and Jiyue 07—with disappointing sales figures, particularly in comparison to competitors in the electric vehicle sectorFor instance, throughout the first eleven months of 2024, Jiyue's monthly average sales remained frustratingly low, commanding attention in an industry where sales figures dictate positioning and viability.

Despite the sluggish demand for its vehicles, Jiyue is rapidly expanding its physical presence, opening 140 additional stores

A current employee voiced concerns regarding the financial implications, especially rental costs in metropolitan areas amounting to several million yuan per outlet, not to mention ongoing expenses associated with staffing.

Interestingly, when comparing Jiyue’s financial health against that of rivals such as Xpeng Motors, which has successfully delivered approximately 100,000 vehicles in a similar timeframe with a substantially larger workforce, the disparity becomes glaringJiyue’s inflated operational expenses juxtaposed with an extremely low sales figure emphasizes the unsustainable nature of its current business model.

Compounding these challenges, a harsh reality looms over the electric vehicle market: only a select few, notably Tesla and BYD alongside one other Chinese manufacturer, have managed to achieve profitability among a sea of entities deep in the red

The automotive sector, particularly amidst the ongoing price war that has gripped the market since 2022, is undergoing significant transformations, which place even established firms like NIO and XPeng in precarious positions.

The automotive industry's profit margins are at a historic low, evoking concerns for manufacturers grappling with the elevated costs of production and marketingAs Jiyue faces mounting debts and overdue payments to suppliers exceeding a year, it becomes glaringly evident that like many others, it is not isolated in its struggles; numerous manufacturers have succumbed to the pressures of an unforgiving marketplace.

Looking ahead, Jiyue must navigate through uncharted waters, contending with shrinking revenues and heightened competition