Produced by Leida Finance, Written by Xiao Sa, Edited by Shen Hai

Since the beginning of the year, Neta Auto has found itself on the brink of a crisis, beset by lawsuits, website issues, and frozen shares.

On January 8, Leida Finance learned from Tianyancha that on January 7, two new court session announcements were added for Hozon New Energy Auto Co., Ltd., the company behind Neta Auto. The plaintiffs were Anhui Taipu Material Technology Co., Ltd. and Zibo Zhenweijingxing Venture Capital Management Partnership (Limited Partnership), with the cases involving disputes over sales contracts and company resolutions.

In addition to lawsuits, Neta Auto has also encountered frozen shares. On January 3, 27 million shares of Neta New Energy Automobile Manufacturing Co., Ltd., a wholly-owned subsidiary of Hozon New Energy Auto Co., Ltd., were frozen by the Tongxiang People's Court. As of now, there are 26 records of share freezes for the company.

Recently, Neta Auto's official website also experienced a "shutdown." Some netizens reported that in the early morning of January 6, Neta Auto's official website displayed "System under maintenance, please try again later." The website was restored to normal by noon on January 6.

Coupled with recent negative news about the brand, including work stoppages, layoffs, and the CEO's resignation, this has sparked speculation about the future of Neta Auto.

Continuous Troubles for Neta Auto

Public information shows that as a former "sales champion" among emerging forces, Neta Auto has been plagued by turmoil since last year.

In February 2024, an employee posted on social media that Neta Auto failed to pay year-end bonuses on time, attracting public attention.

At that time, Zhang Yong, then CEO of Neta Auto, wrote a post stating, "Maybe a small number of employees in the company are not used to living a tough life. It seems necessary to convey the reality to everyone."

Entering the second half of the year, Neta Auto once again found itself embroiled in a salary reduction controversy.

On October 16, 2024, a netizen revealed on social media that Neta Auto did not pay last month's salaries on time and that the company owed money to suppliers.

At that time, the relevant person in charge of Neta Auto responded that the company was undergoing a series of positive internal management changes, including adjustments to the salary structure and optimization of the performance appraisal system.

By the end of October, news of salary reductions at Neta Auto emerged again. In response, the company said that in the face of the current complex and volatile market environment, the company must take measures to address the challenges, including implementing organizational streamlining, reducing redundant personnel, focusing on business, and implementing flat management.

Furthermore, on November 7, news spread that Neta Auto had initiated large-scale layoffs. According to a report by Caijing, the layoff ratio may reach up to 70%, with variations among departments. Neta Auto stated that it was building a more centralized and efficient organizational structure, integrating departments based on business requirements and future development needs.

However, since then, Neta Auto has not only failed to shake off topics related to "money" but has also staged a "leadership change" drama at a critical juncture filled with crises.

At the end of last year, Neta Auto officially announced that due to strategic adjustments, Zhang Yong would no longer serve as CEO and would instead become a company advisor. Fang Yunzhou, the founder and chairman of Neta Auto, concurrently served as the company's CEO.

In a letter to all employees, Fang Yunzhou announced three goals for Neta Auto: First, the company would carry out bold reforms with the aim of targeting the global market; second, under the reform storm, IPO would become a top priority; and third, strive to turn the overall gross margin positive by 2025 and achieve overall profitability for the company by 2026.

It is currently difficult to judge whether these long-term goals can be achieved. Judging from the current situation, the company seems to have not yet emerged from the crisis.

According to China Business News, on January 4, netizens reported on social media that the after-sales service group for Neta Auto's direct store in Haikou had been closed, and the after-sales team had collectively resigned. At the same time, the contact information for the two stores in Haikou displayed on the Neta Auto mini-program was empty.

In addition, a reporter from Star Market Daily visited Neta Auto stores in Shenzhen and learned that multiple frontline stores have already closed, direct stores have been scaled back, and dealer stores have withdrawn.

Furthermore, Hozon New Energy Auto Co., Ltd. (hereinafter referred to as "Hozon New Energy"), the parent company of Neta Auto, has had 26 shares frozen and has become the defendant in multiple lawsuits.

Where Does the "Darkest Moment" Come From?

According to Tianyancha App, Hozon New Energy Auto Co., Ltd. was established in October 2014 with Fang Yunzhou as the legal representative and a registered capital of 2.837 billion yuan.

Since 2017, Hozon New Energy has obtained a total of 15 rounds of financing, with the last round in September of last year.

Regarding this recent round of financing, Sina Tech reported at the time that BTG Pactual, a Brazilian investment bank, would join hands with Sertrading, a Brazilian import trader, to provide 1 billion Brazilian reais (approximately 1.3 billion yuan) in financial support to Neta Auto for the Brazilian market. This support would be used for import services, charging infrastructure construction, and other aspects to help popularize new energy vehicles in Brazil.

Having received a large amount of financing, Neta Auto had a period of highlight moments.

In terms of sales, relying on low-end models with higher cost-effectiveness, Neta Auto achieved continuous sales growth from 2020 to 2022, reaching 15,100, 69,700, and 152,100 units, respectively. In 2022, the brand won the sales championship among emerging forces with annual sales exceeding 150,000 units.

However, starting from 2023, Neta Auto's sales have continuously declined. Throughout the year, Neta Auto delivered 127,500 vehicles, a year-on-year decline of 16%, falling out of the first tier of emerging forces.

From January to September 2024, Neta Auto's cumulative sales were 85,900 units, achieving only 28.63% of the annual delivery target. Furthermore, starting from October, the company has not released monthly sales data.

What caused the transition from "sales champion" to "laggard"? At the beginning of last year, Zhang Yong reflected on the sales issue, believing that the failure to properly manage the transition between old and new products, a chaotic pace, outdated communication methods, inability to effectively convey good information, and a centralized marketing headquarters with weak management contributed to the decline in Neta Auto's sales.

In fact, some also believe that the failure of the product strategy also hindered Neta's sales. After successfully tapping into the sinking market with a cost-effective approach in the early stages, Neta Auto began launching two new products, the Neta S and Neta GT, in the second half of 2022, attempting to enter the mid-to-high-end market.

However, against the backdrop of the price war in the automotive market in 2023, these two products performed mediocrely in the market and did not play a role in boosting Neta's sales. The former had a single-month peak sales volume of less than 3,000 units, while the latter currently sells less than 100 units per month.

In the view of automotive industry analyst Liu Yiming, generally speaking, it is relatively easy for high-end brands to penetrate the lower market, but it is extremely rare for brands that focus on the low-price market to establish recognition among high-end consumers.

Regarding the IPO, after the failure of the IPO on the STAR Market in 2020, in June of this year, Hozon New Energy, the parent company of Neta Auto, submitted IPO application materials to the Hong Kong Stock Exchange. However, as of now, there has been no clear progress.

According to the prospectus, Neta Auto has been unable to achieve profitability. In 2021, the net loss was 4.84 billion yuan, in 2022 it was 6.666 billion yuan, and in 2023 it was 6.867 billion yuan.

At the same time, as of the end of 2023, the company's cash and cash equivalents balance was 2.837 billion yuan, with short-term borrowings of 4.317 billion yuan, long-term borrowings of 1.44 billion yuan, notes receivable and accounts receivable of 2.65 billion yuan, notes payable and accounts payable of 6.226 billion yuan, and an asset-liability ratio of 86.28%.

With expanding losses, high debt ratios, and declining sales, Neta Auto urgently needs external "blood transfusions" under these circumstances.