Introduction

Introduction

HT Auto's parent company Human Horizons has entered bankruptcy reorganization, and at the same time, senior R&D executives have been exposed for "not understanding products, acting recklessly, yet having multiple personal assistants."

"HT Auto's parent company Human Horizons sentenced to bankruptcy reorganization!"

"Isn't there $1 billion invested in HT Auto by iAuto?"

"Do you believe Yang Rong, the person behind iAuto, will actually fund this?"

...

HT Auto, which sparked a new wave of collapse among new energy vehicle companies earlier this year, has not yet concluded its story.

On August 8, 2024, a "Decision of the Yancheng Economic and Technological Development Zone People's Court" was circulated. According to the document, HT Auto's parent company, Human Horizons (Jiangsu) Technology Co., Ltd. (hereinafter referred to as Human Horizons), has been accepted by the court for pre-reorganization.

As a result, HT Auto resembles a centipede that dies but does not decay, with a large number of employees owed unpaid wages and no clear resolution in sight. However, reorganization means that bankruptcy liquidation will not occur in the short term, and the HT Auto brand will not immediately disappear.

Auto Society has continuously tracked and reported on HT Auto's developments since the beginning of the year, including stories deleted by the manufacturer such as "HT Auto Halted by Bosch" and revealing the struggles and hard work of HT Auto's R&D personnel in "The Production Line's Moutai, HT Auto's Downfall."

During our interviews with HT Auto employees, we repeatedly heard that "slow Intelligentization speed" was one of HT Auto's shortcomings. The reason for HT Auto's lagging intelligence development can be attributed not only to a management team largely composed of traditional automotive industry veterans who struggle to adapt to the development trend of intelligent vehicles but also to the inaction and even reckless behavior of the head of intelligent R&D.

"The exposed individual is a former IOV head, Yu Hai, who was not proficient in intelligent technology but loved to monopolize power and indulge in personal desires," an insider told Auto Society. "He almost disrupted the entire automotive intelligence R&D process, but ironically, no suitable replacement could be found after his departure."

Up to this point, the story of HT Auto's decline is becoming increasingly complete, but it seems far from revealing the full picture.

While BYD and leading new energy vehicle companies are forging ahead, those lagging behind or burdened by incompetent senior management are becoming faint backdrops in the jungle of competition, serving as a stark contrast to the success stories of their peers.

"HT Auto won't die overnight, but it's also not thriving"

According to the "Decision of the Yancheng Economic and Technological Development Zone People's Court," on July 1, 2024, Human Horizons (Jiangsu) Technology Co., Ltd. applied to the court for reorganization due to its inability to repay all due debts with its assets but its potential for reorganization and value. It also simultaneously applied for pre-reorganization.

In reality, the announcement on August 8 was merely the official filing and approval of Human Horizons' pre-reorganization by the Yancheng Economic and Technological Development Zone People's Court.

For Ding Lei, the founder of Human Horizons and HT Auto, taking over the Yueda Kia factory in his hometown of Yancheng was once a triumphant return and was seen as a symbol of the local revitalization of the manufacturing industry. However, now being pushed into reorganization by the local court is indeed lamentable.

So, what is "pre-reorganization"? What is the difference between bankruptcy reorganization and bankruptcy liquidation? Can HT Auto and Human Horizons survive?

Bankruptcy reorganization (distinguished from "bankruptcy restructuring" in some contexts, where "reorganization" is court-led and carries more legal significance) aims to save the enterprise, while bankruptcy liquidation aims to dissolve it. The former involves asset integration, including additional investment, while the latter involves the distribution of bankruptcy assets through measures such as auctions, forced sales, and discounted sales.

Entering reorganization gives a company hope of survival or rebirth; entering liquidation, however, is virtually a death sentence. Therefore, Human Horizons and HT Auto have not yet reached the point of complete demise, and we can still expect to see related "tug-of-war" reports.

"Pre-reorganization" is a preparatory step for reorganization, where major creditors, investors, debtors, and reorganization investors negotiate and reach a consensus on key reorganization terms under the guidance of the people's court.

However, HT Auto's business and employees are still struggling. According to the "Decision," "As of April 30, 2024, the company's known due and unpaid debts have exceeded its total assets, and its assets are insufficient to repay all debts, thus meeting the criteria for bankruptcy." Clearly, insolvency has made it difficult for Human Horizons and HT Auto to continue operating.

On May 16 of this year, reports indicated that HT Auto had received a $1 billion investment from iAuto Group Inc. iAuto was fully committed to supporting HT Auto's resumption of production, with plans to complete the transaction before the announcement of HT Auto's parent company's first-half 2024 financial results; Human Horizons also formally signed a "Comprehensive Strategic Cooperation Agreement" with iAuto.

"iAuto is only willing to cover employee salaries and not many other debts, which is why progress has been slow," an insider told Auto Society.

Meanwhile, there have been changes in the management of HT Auto's financial department. "These people have been removed, making it difficult for us to claim our wages," said aggrieved employees.

The duration of pre-reorganization has also prolonged the wait for unpaid wages. "The pre-reorganization period is six months from the date of issuance of this Decision, and may be extended by three months upon application by the pre-reorganization administrator for legitimate reasons," which, in the eyes of HT Auto employees, has become a delaying tactic.

"Unproficient in technology but surrounded by personal assistants"

Why has HT Auto fallen into a precarious situation? In addition to the high positioning of its models and weak product competitiveness, especially in terms of intelligence, this is a crucial factor.

Why is HT Auto's intelligence level insufficient?

As we have summarized in previous articles, Ding Lei, with his background in traditional automakers and local government experience, values mechanics over software, vehicle-to-everything (V2X) coordination over in-vehicle intelligence, product quality over innovation pace, and control and balance within the company over the new era and industry trends.

However, aside from Ding Lei's lack of understanding of software, why were the senior R&D executives unable to turn the situation around? This is closely related to the recent scandal involving the long-term underperformance, and even negative impact, of the head of HT Auto's Internet of Vehicles (IOV) business.

"Colleagues say that HT Auto's native language is silence."

"The intelligent and connected vehicle sector is unchanging, but the general managers come and go. It's not that one is worse than the next; it's just that one is more useless than the other. Some only care about cultivating their subordinates, some will stop at nothing to eliminate dissenters, and some are two-faced and keep secrets."", said a former HT Auto employee.

The executive who faced the most criticism was Yu Hai, who served as the general manager of HT Auto's IOV business from early 2022 to early 2023.

"Yu Hai joined in early 2022 with a recommended headhunter company and a salary of up to 3 million yuan per year, but in reality, he did not understand many technical aspects of the business, leading to reckless management of R&D," said the whistleblower.

"For technologies he did not understand, he relied on his subordinates to compile materials and took credit for their work. While this may be common in many companies, nepotism, skip-level management, and exclusion of dissenters were more pronounced in his case. He often appointed individuals unfamiliar with the business to lead departments and frequently issued direct instructions to engineers, leaving their managers at a loss and reminiscent of Chiang Kai-shek's micromanagement," the whistleblower added.

In August 2022, an anonymous letter accusing Yu Hai was written by suppressed R&D employees, mentioning that "some senior executives at the highest level of the company do not have personal assistants, but Yu Hai had several, and traveled extensively; he liked to hold self-congratulatory meetings and indulge in lavish dining, buying fine wine and dining at expensive restaurants, refusing to let his subordinates leave without getting drunk..."

However, even after such a controversial figure left, "no suitable replacement could be found."

It is evident that there are serious flaws in HT Auto's talent and management mechanisms.

"Do you think Ding Lei and the management committee were unaware of these messy situations? No, although some members of the management committee tried to hide things from Ding Lei. Essentially, it was the top-level power struggle within the company that allowed individuals like Yu Hai to occupy key positions, damaging HT Auto's R&D foundation," said an insider with a sense of frustration.

In July, China's new energy vehicle penetration rate exceeded 51%, setting a new monthly high. Companies like BYD, Geely, Aion, Lixiang, Hongmeng Zhixing, and NIO continued to record impressive achievements, while names like HT Auto and Aichi gradually slipped into oblivion.

Ultimately, the fundamental factor determining whether a company will be a golden brand or a blood-stained name lies in its "people."