Amidst speculations about whether Geyue could overcome its difficulties, the company incurred fresh debts. An online "Joint Statement from Geyue Auto Suppliers" circulated, claiming that Geyue owes nearly 2 billion yuan to all its suppliers, based on incomplete statistics. As the financial hole widens, securing new financing becomes increasingly unlikely.

Signs of Geyue's abrupt collapse were not sudden.

In November, rumors spread on social media that Jidu (Geyue Auto's predecessor) had laid off 40% of its staff and its CFO had fled. However, these rumors did not cause much stir at the time, and Geyue's legal department promptly denied them as false.

Dramatically, just after Geyue denied the rumors, it disbanded on the spot. On December 12, Geyue suspended operations, and CEO Xia Yiping was surrounded by employees at the Shanghai headquarters. Since then, employees and company representatives have been engaged in round-robin negotiations.

During a discussion, a Geyue executive pointed out, "In September, we planned to lay off 1,500 people, but due to insufficient compensation funds in the company's account, it was shelved." He admitted that management had spotted the "storm clouds" at that time and even earlier.

Why did Geyue continue to accelerate despite knowing there were insufficient funds to support normal operations?

Let's rewind to the beginning of this year. Nearly half a year after its launch, sales of the Geyue 01 hovered around a hundred units. A senior Geyue executive recalled, "At the time, the marketing cost per Geyue 01 vehicle averaged tens of thousands of yuan. Financial projections were easy to make, and we judged that the company's cash flow would run into problems by October."

However, Geyue did not slow down the expansion of its offline stores. Due to the lack of new external financing for a long time, the financial pressure fell on its two wealthy parents, Baidu and Geely.

"The board saw such poor sales and didn't want to invest any more money. So, Xia Yiping was asked to sign a military order. If Geyue's sales did not exceed 1,000 units in May, Xia Yiping would have to leave." A Geyue insider said that relying on various discounts and promotional policies, Geyue announced terminal sales of 1,001 units in May, barely "crossing the line."

In terms of sales alone, Geyue has maintained a sustained growth trend since July. These seemingly positive signals masked the real problems. Geyue was like a car without brakes, accelerating straight towards the cliff...

After announcing the "on-the-spot disbandment," Xia Yiping, who still insisted that "the company's finances are not a problem," lost the trust of employees. "On December 14, Xia Yiping said he would submit a compensation plan for employees to both shareholders and provide regular updates on progress. Two days have passed, and there has been no movement." Disclosed by a Geyue insider.

Inflated Sales, Disappearing Core

During the Chengdu Auto Show in August this year, Xia Yiping momentarily lost control of his emotions during an interview. Choking back tears, he said, "We sold over 200 units in January and only over 100 units in February. I feel terrible." He frankly shared his bitter journey, expanding the company's staff from 3,000 to 5,000 since its establishment in 2021, experiencing many hardships along the way.

"At the end of last year, the finance team warned Xia Yiping about the company's financial situation and requested an end to disorderly expansion." Disclosed by a Geyue insider, it is evident that Xia Yiping did not heed this advice. Besides the growing workforce, Xia Yiping publicly stated in October 2023 that the plan was to open over 250 offline stores in 2024. Just a month before the collapse, Geyue added 11 new stores. Official data shows that the number of Geyue offline stores has reached 140.

"This year's sales boost was mainly achieved through terminal price 'discounts.'" The above Geyue insider revealed that in October this year, the Geyue 01 Renewed Edition was upgraded with silicon carbide motors. Before that, the older model underwent a similar "inventory clearance" process for several months at the terminal. "In some places, display cars were even sold at bargain prices."

Although Xia Yiping has repeatedly stated in public that copying others leads nowhere, and some Geyue insiders have revealed that Xia Yiping once boasted of being a "marketing genius" at internal meetings, from a series of his marketing actions—creating a personal IP, live streaming, and other unconventional methods he employs—all bear strong signs of imitation.

Public reports have stated that Li Yanhong's evaluation of Xia Yiping is that he understands cars, the internet, has entrepreneurial experience, a technical background, passion, and a sense of mission, making him a very suitable and rare candidate. However, judging from Xia Yiping's past experience, it is difficult to call him an "insider."

"Perhaps due to Xia Yiping's cross-industry background, many people without experience in the automotive industry have joined the company." Disclosed by a Geyue insider. Some insiders even described Xia Yiping as having a "bias against professionals in the automotive industry," leading to a lack of true industry experts in Geyue's management.

Before the company's collapse, CFO Liu Jining had already retreated. Media reports claimed that Liu Jining did not flee with money as rumored online but voluntarily resigned in October. His personal signature on internal communication software still reads, "Tactical efforts cannot cover up strategic mistakes."

A Geyue insider recalled that it was not just CFO Liu Jining whose whereabouts were a mystery at the time, but also Wang Yong, the head of Geyue's vehicle engineering. "Before the collapse, the company had already decided not to develop new vehicles, and Wang Yong rarely appeared at the company anymore."

This is not an act of God, but man-made disaster

Public reports have stated that the main reason for Geyue's collapse is Baidu's withdrawal of investment, primarily due to the discovery of a financial hole of up to several billion yuan at Geyue.

Wang Yunpeng, Vice President of Baidu Group and President of Baidu Intelligent Driving Group, recently stated publicly that Baidu will be responsible for the technical support of Geyue's intelligent driving and map navigation. As a technology provider, Baidu Apollo provides Geyue with a pure vision-based ASD intelligent driving solution and lane-level navigation maps. According to Baidu insiders, the annual maintenance cost of this system is at least tens of millions of yuan.

Xia Yiping said his strategic mistake was not anticipating the severity of funding issues. Is this really the case?

Media reports claimed that at the August board meeting this year, both shareholders discussed whether Baidu needed to continue investing in Geyue, but Baidu executives did not give a clear stance. At the end of 2023, Geyue had already reported an expected loss of 7 billion yuan to Baidu for 2024.

A senior Geyue executive revealed, "The company's monthly payroll is approximately 160 million yuan. For such a large company, there isn't even 200-300 million yuan in cash on its books. Since complete financial statements are submitted to both shareholders every quarter, both shareholders are aware of Geyue's financial situation." He stated that Geely uses its own factories to manufacture for Geyue, and Geyue still owes a lot of money.

In other words, whether it's Xia Yiping or the shareholders, they have long been aware of this huge financial hole, but each party had their own calculations.

The above Geyue executive speculated that Geely has been willing to cooperate because it believes Baidu will cover any shortfalls, and Xia Yiping also believes this. He revealed that before the explosion, Geyue used multiple forces to pressure Li Yanhong, hoping Baidu would lend a hand and continue investing, but Li Yanhong remained silent.

"The board must approve all financial expenditures for a fiscal year. Xia Yiping can approve up to 20 million yuan on his own, and any amount exceeding this limit requires board approval." The executive pointed out that this is why Xia Yiping said during negotiations with employees, "Getting a resolution from the board is not something I can decide on my own."

Xia Yiping's statement is partly true but not entirely accurate. Besides major announcements like disbandment, the CEO has the final say in the company's daily affairs. Directors appointed by shareholders generally do not actively participate in the company's daily operations and management.

If Xia Yiping's mistakes were only in his staffing and management style, as a professional manager, he could only be criticized for incompetence or lack of ability.

But Xia Yiping unfortunately defines himself as an "entrepreneur." This entrepreneur has never enabled the company to generate its own revenue and has relied on external support, believing he has two wealthy patrons. Even in the final critical moments, all he could do was tell everyone, "I've tried my best."

A Geyue insider revealed that Xia Yiping's current main task is fundraising, and he is actively contacting investors for help. However, the attractiveness of the "AI + vehicle manufacturing" ecosystem story in 2024 remains questionable. Moreover, times have changed, and there is not as much hot money flowing into the smart electric vehicle sector as before.

Before leaving Geyue, Liu Jining lamented that tactical efforts cannot cover up strategic mistakes. In fact, Geyue's biggest strategic mistake was placing a professional manager like Xia Yiping in an entrepreneurial position. Ironically, even as the company completely collapsed, Xia Yiping still described himself as an "entrepreneur."