Market rumors are often not baseless.

Last Friday, the rumor that Zhang Yong, CEO of Nezha Auto, had been dismissed was finally confirmed by the company. The company's founder and chairman Fang Yunzhou took over as CEO, stepping back into the spotlight. Regardless of who is at the helm, survival is Nezha Auto's top priority.

Zhang Yong's sudden dismissal

It has long been noticed that Zhang Yong, CEO of Nezha Auto, stopped updating his social media after October 14. This year, he was one of the most active automakers' leaders, and despite not being good in front of the camera, he once became an "Internet celebrity CEO." On December 2, media reported that he had been dismissed, which Nezha Auto denied. In the following days, the news became more credible, even specifying that his next career stop would be at the logistics commercial vehicle brand Dali Niumo Wang. Zhang Yong himself responded, "It's pure nonsense." Last Friday, Nezha Auto officially confirmed that due to strategic adjustments, Zhang Yong would no longer serve as CEO but would become a company consultant.

The CEO position would be concurrently held by the founder and chairman Fang Yunzhou. Zhang Yong is 49 years old and in his prime. Early in his career, he studied Automotive and Tractor Engineering at Hefei University of Technology. He is a veteran in China's automotive industry, having served as Vice President at Chery New Energy Automobile Co., Ltd. From March 2014 to January 2018, he served as Vice President and Head of the Marketing Company at Beijing Automotive Group New Energy Automobile Co., Ltd. Later, invited by Fang Yunzhou, he joined the startup Hozon Auto and led the creation of the Nezha Auto brand and products from scratch. Zhang Yong believes he shares the personality traits of Nezha and hopes to challenge himself. According to media reports, Zhang Yong also determined the brand name "Nezha."

In November 2018, Hozon Auto launched its first model, the Nezha N01, priced at 59,800-69,800 yuan after subsidies. Its positioning as a small pure electric SUV and affordable price attracted the attention of many young people. Following the success of the N01, the company launched the Nezha V, priced at 59,900 yuan after subsidies, continuing to set sales records. In the marathon of new energy vehicles, Nezha Auto won at the starting line under Zhang Yong's leadership. Subsequently, the brand rapidly introduced new models, including the X series, L, S, GT, and other models, targeting the 100,000-200,000 yuan price range. This is the most competitive segment in the new energy vehicle industry. Analysts point out that during this stage, Nezha Auto's strategic mistakes, ineffective marketing, and increasing market competition contributed to its current passive situation. If someone had to take responsibility, it could only be CEO Zhang Yong.

Fang Yunzhou takes the helm in an emergency

Nezha Auto founder Fang Yunzhou is the same age as Zhang Yong and was his classmate at Hefei University of Technology. In 1997, Yin Tongyue started Chery with a local startup fund of 300,000 yuan. The following year, Fang Yunzhou joined. During his over ten years at Chery, Fang Yunzhou worked in the R&D department and served as Vice President of Chery New Energy Automobile Co., Ltd. In 2014, he left Chery to pursue a postdoctoral degree at Tsinghua University while starting the Hozon Auto venture. Since his classmate and former colleague Zhang Yong joined the company, Fang Yunzhou has retreated to the background, focusing more on manufacturing and R&D. Zhang Yong once commented in an interview that he and Fang Yunzhou were "the best team," with seamless cooperation and harmony, sharing the same directional goals without any disagreements.

Since October this year, Nezha Auto has frequently been embroiled in rumors of unpaid wages, layoffs, delivery difficulties, and suspected production halts, deeply affecting all aspects of the company's development. On November 27, Fang Yunzhou appeared on an interview program to directly respond to the company's recent issues. Fang Yunzhou admitted that Nezha Auto has been struggling to survive. Ten years ago, when he founded Hozon Auto, he aimed to be a "windmaker" rather than a "wind chaser," dooming the journey to be difficult. After a decade of entrepreneurship, experiencing too many dark moments before dawn, he embodies the tenacity of "In your era, who else will carry the burden if not you?" This time, replacing Zhang Yong as CEO, Fang Yunzhou immediately issued a letter to all employees, over 2,000 words long, proactively taking primary responsibility for the company's issues. Simultaneously, he announced a series of reform measures, including implementing an employee stock ownership plan, optimizing organizational changes, and focusing on core businesses. In his letter, he stated that Nezha Auto's path should not be one of intense internal competition or self-consumption but rather a path of high-quality sustainable development. "Global expansion based in China is the answer to Nezha Auto's second startup." In this letter, he did not mention former CEO Zhang Yong at all.

Nezha's survival

Nezha Auto has had its glorious moments. In 2022, relying on the popularity of the Nezha V, the brand delivered 152,000 vehicles annually, surpassing other new-energy vehicle makers and topping the sales chart. However, this rapid growth momentum did not continue. In 2023, deliveries dropped to 127,500 vehicles, making Nezha Auto the only brand with negative growth among new forces. Within Nezha Auto, there is a clear understanding of its past glory. Zhang Yong once said in an interview, "That was our first attempt with a somewhat unstable foundation... Our marketing system, quality assurance system, supply chain, and internal strategic management are still not at the forefront of the industry." As an investor in Nezha, Zhou Hongyi personally "guided" Nezha Auto's marketing efforts this year, significantly enhancing the brand's presence.

On April 22, the Nezha L was launched, and within 15 days of its debut, orders exceeded 30,000. This surge in orders may have been unexpected within the company. Supply chain pressures, delayed product deliveries, and a high order cancellation rate ensued. This year, the company's situation remains bleak. In the first ten months, Nezha Auto delivered approximately 92,000 vehicles, a 16% year-on-year decline, far from the annual target of 300,000 vehicles. In response to Banma Consumption, Nezha Auto stated that during the peak automotive consumption season of "Golden September and Silver October," the company exceeded its sales targets, currently has sufficient orders, and is gradually delivering vehicles. Automobile manufacturing is an extremely costly industry. Around 2016, Hozon Auto once struggled to pay salaries for half a year. The situation only improved after the company raised 22.8 billion yuan in ten rounds of financing in the primary market after 2017.

However, the company's continuous losses have not fundamentally improved. From 2021 to 2023, the company's combined operating losses exceeded 17.2 billion yuan, leading to a critical cash flow situation. As of the end of April this year, the company's cash and cash equivalents were down to only 400 million yuan. This year, multiple suppliers have sued Hozon Auto for contract disputes, demanding payment. Regarding concerns about its cash flow, Nezha Auto stated that in November this year, it reached a strategic cooperation with Nanning Industry Investment Group, which will provide supply chain financial support for the company.