The long-rumored departure of Zhang Yong, CEO of Nezha Auto, has finally been confirmed. On December 6, Nezha Auto announced that due to strategic adjustments, Zhang Yong would no longer serve as CEO and would instead transition to the role of company consultant; meanwhile, Fang Yunzhou, the founder and chairman of Nezha Auto, would take on the additional role of CEO. Additionally, Nezha Auto refuted rumors that Zhang Yong had joined the commercial vehicle brand "Dali Niu Ma Wang," stating that the information was "false."

On the same day, Fang Yunzhou sent a letter to all employees reflecting on Nezha's challenging decade, mentioning that during the past ten years, Nezha Auto had faced difficulties such as having to pay the salaries of four to five hundred employees with only a few hundred thousand yuan left in the company's account. They had also experienced partners selling their homes without hesitation to support the startup for seven months with no turning back. Now, Nezha Auto once again stands at a crossroads.

Fang Yunzhou acknowledged that in the past two years, amid intense market competition, Nezha Auto had exposed a series of issues in its strategy, organization, and management system, causing short-term turbulence in the company's development. At the same time, Fang Yunzhou apologized to all employees for these issues and the recent public outcry surrounding Nezha Auto. "We have passed the most dangerous point," Fang Yunzhou said in his open letter. Based on this assessment of Nezha Auto's current situation, Fang Yunzhou proposed six reform measures:

1. Firmly implement a "people-oriented" approach. Respect and stimulate the maximum innovative drive and vitality of talent.

2. Implement an employee stock ownership plan, allowing every team member to share in the fruits of Nezha's development and hard work.

3. Optimize and restructure to create a flatter and more efficient organization, streamline the middle and back offices, reduce administrative costs, and promote youthfulness.

4. Reform the organizational mechanism to build a new Nezha that is more transparent, efficient, incorruptible, and vibrant.

5. Reshape the corporate culture. Foster a resilient and ambitious team with ideals and drive.

6. Strategically focus on business, reborn from adversity, and expand overseas. Focus on products that meet market expectations and have positive gross margins, engage in moderate domestic competition, look beyond borders, and strive to create several globally popular models.

Fang Yunzhou stated that global expansion based in China is the answer to Nezha Auto's second venture, crucial for the company's short-term survival and future competitive edge. "This is a strategy that has been deeply considered and will be firmly implemented," Fang Yunzhou said. Through these reforms, Nezha Auto has also clarified its next four development goals:

1. Focus all efforts on achieving an IPO.

2. Achieve a 50-50 sales split between domestic and international markets within the next 2-3 years.

3. Turn overall gross margin positive by 2025.

4. Achieve overall corporate profitability by 2026.

Nezha Auto's path to going public has been fraught with challenges. As early as July 2020, Nezha Auto announced the initiation of its application for a listing on the STAR Market, aiming to complete the listing by 2021. However, this listing ultimately did not materialize. In February 2022, Nezha Auto was rumored to be shifting its IPO efforts to Hong Kong, but the company denied this information. In June 2023, there were reports that Hozon Auto would submit a $1 billion Hong Kong IPO application within the month, to which Nezha Auto responded that the information was false.

In October last year, when discussing the progress of its IPO, Nezha Auto stated that it was not in a rush to go public. However, on June 26th of this year, Nezha Auto's parent company, Hozon New Energy Auto Corp., submitted a prospectus to the Hong Kong Stock Exchange. Since then, there has been no further news on Nezha Auto's IPO progress.

In terms of sales, Nezha sold 10,000 vehicles in 2019, 15,000 in 2020, 64,000 in 2021, and 152,000 in 2022, winning the title of top new energy vehicle (NEV) sales among emerging brands that year. However, growth slowed significantly in 2023, with deliveries declining to 124,000 vehicles. In the first half of this year, Nezha Auto delivered a cumulative total of 53,800 vehicles. Monthly data from the China Passenger Car Association (CPCA) on NEV manufacturers revealed that from January to October this year, Nezha Auto sold 93,000 vehicles, a year-on-year decrease of over 18%. Nezha Auto was not listed in the CPCA's November sales data for NEV manufacturers.

Fang Yunzhou has previously emphasized the importance of going overseas multiple times. He stated that the industry is currently highly competitive. As early as 2021, Nezha predicted that the industry would become even more competitive, so they have been considering expanding overseas to seek new development opportunities. He believes that as global NEV sales are just beginning, rapid internationalization is a crucial way for electric vehicle companies to avoid intensifying competition. Meanwhile, in terms of product structure, Fang Yunzhou also indicated that Nezha is making adjustments, including increasing the price of individual products and reducing reliance on a single product.

In October last year, Nezha Auto announced its overseas expansion plan, aiming to establish a presence in 30 countries and regions with over 100 channels and fully launch overseas operations in 2024. From January to June this year, Nezha Auto exported 17,687 NEVs, a year-on-year increase of 154%, maintaining its position as the top exporter among emerging auto brands.

Regarding sales performance, Fang Yunzhou previously responded that currently, all NEV companies are in a trough, and there is not much difference between ranking first, second, or fifth. However, without reaching a certain scale, it is difficult to achieve profitability, which means the company cannot survive in the competition.

Due to not reaching a certain sales scale, Nezha Auto's losses have also increased. The prospectus shows that from 2021 to 2023, Hozon New Energy's total revenue was approximately 5.089 billion yuan, 13.05 billion yuan, and 13.555 billion yuan, respectively. Among them, the growth rate in 2022 reached 156%, and slowed down in 2023, mainly affected by sales volume.

At the same time, since October, Nezha Auto has been surrounded by a series of negative news regarding unpaid wages, salary reductions, and layoffs. In mid-October, Nezha Auto was exposed for not paying salaries on time; by the end of October, it was reported to have implemented a salary reduction plan for all R&D personnel. Subsequently, Nezha Auto announced the launch of a company-wide equity incentive plan for all employees and unveiled a new salary and performance evaluation scheme. At the same time, Nezha Auto announced a series of cost-reduction and efficiency-enhancement measures, including organizational streamlining, redundancy elimination, business focusing, and flat management.

Alongside these negative news, there was also good news for Nezha Auto. For example, in mid-November, the Nanning Industrial Investment Group reached a strategic cooperation with Hozon Auto (Nezha) to provide supply chain financial support, help coordinate and organize raw material procurement, production, logistics, and KD parts exports at the Nanning base, ensuring the stability of Nezha Auto's overseas supply chain. It is reported that Nanning Industrial Investment has begun promoting the resumption of production and operation at the Nanning plant, which will drive the full resumption of production at Nezha Auto's three major domestic plants.

For Nezha, this is once again a critical moment of life or death.