When Electric Car Companies Collapse, Cars Sold Become Scrap

Recent rumors have swirled around the Chinese electric vehicle (EV) company Weltmeister (威马汽车), indicating financial troubles and insolvency, with some even speculating about the company’s bankruptcy and the CEO’s flight​¹​​²​. These rumors have undoubtedly cast a shadow over the firm’s otherwise promising journey in the competitive EV market of China. Established in 2015, Weltmeister aimed to play a significant role in the EV landscape. Its ambitious ‘three-step’ strategy outlined a roadmap to first become a popularizer of intelligent electric vehicles, then transition into a data-driven smart hardware company, and eventually evolve into a service provider in the new ecosystem of smart mobility​³​​⁴​​⁵​.

Weltmeister’s journey began with a significant splash, signaling its entrance into the automobile manufacturing realm. Within a short span, it had its first self-built factory established in Wenzhou, and by March 2018, the first mass-produced car, the EX5, rolled off the assembly lines. The company was recognized as one of the new forces in automobile manufacturing, keeping pace with other notable new entrants like Nio, Li Auto, and Xpeng Motors​⁶​.

Impact on Weltmeister Car Owners

The unraveling of Weltmeister (威马汽车) has cast a gloomy shadow not only on its own brand but also on the emerging EV companies in China. The post-bankruptcy phase has been particularly harsh for existing Weltmeister car owners, who have encountered a barrage of technical issues stemming from a lack of spare parts to malfunctioning car systems and apps, severely hampering the vehicle’s usability​⁷​​⁸​​⁹​.

Customers have voiced their grievances on various automotive forums and complaint websites, showcasing their frustrations with the unresponsive customer service, and the lack of support for maintenance and repairs. The scenario of awaiting parts indefinitely, with vehicles held hostage at service centers, has become a common narrative among Weltmeister car owners. One poignant plea found online encapsulates the sentiment: “I’m begging you, can you please fix my car?” Such stories expose the stark reality of owning a Weltmeister vehicle in the wake of its financial troubles. The company’s inability to supply essential parts has left owners with vehicles that are virtually inoperative, making the maintenance and repair a quagmire​¹⁰​​¹¹​​¹²​.

Furthermore, the debacle has triggered a plummet in the resale value of Weltmeister vehicles, as trust in the brand erodes. As a result, the resale market for Weltmeister vehicles is dismal, with current owners finding it challenging to offload their vehicles without incurring significant losses​¹³​.

The ripple effects extend beyond just Weltmeister. The ordeal has raised eyebrows and sowed doubt among consumers regarding the viability and reliability of emerging EV companies in China. The narrative of Weltmeister serves as a cautionary tale that underscores the importance of robust customer service and post-sale support, elements that are crucial in building and maintaining consumer trust. Without these, the road ahead for new entrants in the EV market could be fraught with skepticism and hesitance from potential buyers, posing a significant challenge in a market that thrives on innovation and consumer confidence.

From starting a business to running away, Weltmeister’s experience

The journey of Weltmeister (威马汽车) is akin to a rapid ascent followed by a precipitous fall, encapsulating the brutal reality of the cutthroat automotive industry. Launching its operations back in 2016, Weltmeister embarked on its quest with a focus on the compact SUV market, unveiling models like the Weltmeister EX5. The company laid the foundation stone for its factory in Wenzhou, marking its entry as a formidable new force in the automotive arena with its own production facility, a notable achievement at the time​¹​.

Weltmeister’s march forward was characterized by a series of expansions and notable achievements. By March 2018, the company rolled out the first batch of its EX5 models from its production facility in Wenzhou. This facility, nestled at the Oujiangkou Production Base, distinguished itself as the first independently built and operational smart vehicle factory among the new automotive forces within China. Following this, another intelligent manufacturing base was established in Huanggang, embodying Weltmeister’s foresight in laying down two supremely intelligent manufacturing bases, thereby ensuring a tight grip over the entire value chain. This strategic move facilitated stringent quality control, ensuring each vehicle rolled out was of high quality​¹⁴​.

In addition to establishing a solid manufacturing foundation, Weltmeister was also active on the fundraising front. Over a span of six years, the company conducted 12 rounds of financing, with heavyweights like Baidu and Tencent among the investors. One of the funding rounds even amassed a whopping 10 billion RMB, showcasing the substantial financial backing and the high hopes vested in the company​¹⁵​.

However, the path was not all roses for Weltmeister. Despite its initial success, the company faced a tough time with its IPO attempts. Three attempts to go public fell through, with each failure being a blow to its financial stability and market perception. The financial strain continued to tighten its grip, culminating in a bankruptcy filing in 2023​¹⁶​​¹⁷​​¹⁸​.

Adding a layer of intrigue to Weltmeister’s saga were the rumors surrounding its founder, Shen Hui. Post the bankruptcy filing, it was rumored that Shen Hui fled to the US, leaving behind a company scrambling in disarray amidst a mountain of debt​¹⁹​.

The Unique Predicament of EV Ownership

The predicament of EV ownership, as showcased by Weltmeister’s scenario, underscores a deeper concern associated with the modern automotive industry’s digital pivot. Unlike traditional gasoline cars, the functionality of electric vehicles (EVs) is deeply intertwined with company-backed digital and physical infrastructures. From software updates to charging networks, the seamless operation of an EV is invariably tied to the continuous support from its parent company.

This dependency starkly contrasts with the relative independence enjoyed by traditional car owners. A gasoline car’s basic functionality remains intact irrespective of the manufacturer’s financial health. However, for an EV owner, company insolvency can translate into a host of problems, ranging from the inability to receive crucial software updates to being locked out of essential charging networks. This presents a distinctive risk associated with EV ownership.

To flesh out this concept further, let’s envisage a hypothetical scenario where Tesla, instead of Weltmeister, went bankrupt. The ripple effects would be profound and far-reaching. Tesla owners would find themselves unable to access the company’s expansive Supercharger network, rendering long-distance travel a challenge. The proprietary nature of Tesla’s charging infrastructure would exacerbate this issue. Furthermore, crucial over-the-air software updates would cease, potentially leaving car owners vulnerable to unresolved bugs or even security risks. Features like Autopilot or the latest performance enhancements would become relics of the past. Even basic functionalities like starting the car or unlocking it via the mobile app could be jeopardized if server support is withdrawn.

This scenario elucidates the unique challenges and risks entwined with EV ownership, shedding light on the vital role of continuous company support for an optimal EV ownership experience.

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The unraveling saga of Weltmeister serves as a stark reminder to both consumers and budding EV companies about the fragile nexus between innovation and sustainability. It underscores the importance of robust financial and operational frameworks to weather the storms that are part and parcel of the rapidly evolving EV market. The repercussions on consumer trust are palpable, casting a shadow of doubt on the reliability and long-term viability of emerging EV players in China. As someone deeply immersed in this realm, the tale of Weltmeister isn’t just a solitary narrative but a cautionary tableau, urging a prudent approach as we navigate the electrified pathways of the future.