If Nezha Auto can truly pave the way overseas in 2025, as predicted by Fang Yunzhou, it may inspire more industry peers to courageously break the deadlock amidst the tide of change and jointly write a new chapter in China's automotive landscape.

During the 2025 Spring Festival, a domestic animated film titled 'Nezha Reborn' (hereinafter referred to as 'Nezha 2') became a nationwide sensation, raking in over 14 billion yuan at the box office in less than a month. This triumph not only topped the global animated film box office chart but also etched a legend in Chinese film history. Following its internet popularity, search volumes for 'Nezha' surged across various platforms, making its merchandise a hot commodity and generating substantial profits for related merchants.

However, within the automotive industry, there was an exception. In 2025, Nezha Auto, which shares its name with 'Nezha 2', failed to capitalize on the 'Nezha' IP. Instead, it faced numerous questions from the outside world due to trademark disputes with the film's producer.

According to public data, Nezha Auto's domestic retail sales in January 2025 amounted to only 110 units. In comparison, the company delivered 10,032 units in the same month last year, prompting questions about what had gone wrong. Why did sales plummet so drastically in just one year? An Auto Review journalist delved into the situation.

What Happened to Nezha Auto?

As one of the earliest domestic 'new forces' to enter the automotive industry, Nezha Auto gained popularity years ago. At that time, Hozon Auto (Nezha Auto's parent company), as the sole automotive brand partner of the film 'Nezha Reborn', quickly elevated the profile of its Nezha Auto brand. Leveraging the influence of the Nezha IP, the brand swiftly captured the market, delivering 152,000 vehicles in 2022 and topping the sales chart for new-energy vehicle startups. This achievement made Nezha Auto the first new-energy vehicle startup in China to surpass 150,000 deliveries.

Yet, these good times were fleeting. Since 2023, Nezha Auto's sales have been on a continuous decline. Despite incorporating mythical elements into product design, such as 'Windfire Wheels' hubcaps and 'Chaos Ribbons' body lines, and launching the 'Haozhi Strategy' to emulate the mythical warrior god image, this symbolic integration failed to translate into core competitiveness. By the end of 2024, annual sales had halved, dropping from 127,500 units in 2023 to 64,500 units.

Faced with nearly halved sales, Nezha Auto's former CEO, Zhang Yong, publicly reviewed the situation, attributing the decline to issues like poor product transitions, excessively high pricing for new launches, and outdated marketing strategies. However, many believed that the sales decline was due to factors like unclear brand positioning and a limited product line.

Nezha Auto previously focused on a high cost-performance route, with model prices ranging between 60,000 and 150,000 yuan. However, in 2024, major domestic automakers compressed costs and launched highly cost-effective models like the BYD Qin L, Fengyun A8, and Zero Run C10. Meanwhile, Nezha Auto attempted to move upmarket, successively launching mid-to-high-end models like the Nezha L and Nezha X priced above 150,000 yuan, causing it to lose its original core competitiveness.

In terms of funding, Nezha Auto's situation was also precarious. From 2021 to 2023, the company incurred cumulative losses of approximately 18.37 billion yuan. After attempting to upscale its brand, Nezha Auto's cash flow gap widened further in 2024. To alleviate funding pressures, the company actively sought financing. On June 26, 2024, Hozon Auto submitted a listing application to the Hong Kong Exchanges and Clearing Limited, planning to ease pressure through financing. However, Qichacha data revealed that the company still had multiple equity freeze records. This meant that if Nezha Auto failed to turn its gross margin positive in 2025, it might follow the footsteps of WM Motor and HiPhi.

The Path of the Second Startup

Despite its unsatisfactory performance in 2024, Nezha Auto remained confident about its future. It was reported that Fang Yunzhou, the founder and chairman of Nezha Auto, had now begun concurrently serving as the company's CEO.

Fang Yunzhou, born in Tongcheng, Anhui, in 1975, graduated from the Department of Automotive Engineering at Hefei University of Technology and obtained his post-doctorate degree from Tsinghua University. He previously served as the deputy general manager of Chery New Energy, a subsidiary of Chery Automobile, responsible for electric vehicle testing and R&D. In 2014, Fang Yunzhou left Chery New Energy to launch the startup project for Hozon Auto, now known as Nezha Auto. In January 2018, Zhang Yong resigned from BAIC BJEV Marketing to accept Fang Yunzhou's invitation to join Hozon Auto as a co-founder and CEO. Since then, Zhang Yong led Nezha Auto's development and layout, while Fang Yunzhou worked behind the scenes. This was the first time Fang Yunzhou stepped from behind the scenes to the forefront.

After taking over Nezha Auto, Fang Yunzhou promptly acknowledged the various issues exposed by the company in an open letter and expressed his intention to 'start a second business'. He stated that Nezha Auto would implement six major reform initiatives in the future and go all in to promote its IPO, striving to turn the overall gross margin positive in 2025 and achieve overall profitability in 2026.

A recent report revealed that after Fang Yunzhou took office, Nezha Auto's parent company, Hozon Auto, immediately initiated an E-round financing plan worth 4 to 4.5 billion yuan, with the lead investor contributing approximately 3 billion yuan. Nezha Auto stated that after a series of internal adjustments, the company's monthly operating expenses had decreased by more than 50%.

In terms of market strategy, Fang Yunzhou announced that Nezha Auto would focus on the overseas market, concentrating on products that better met market expectations and had positive gross margins. By balancing moderate domestic competition with a focus on overseas markets, Nezha Auto aimed to create several globally popular models, achieving half of its sales in China and half overseas within the next 2-3 years, thereby improving the company's gross margin and profitability.

The Nezha X, launched overseas in 2024, has been sold in nearly 10 countries worldwide. To meet the growing overseas order demand, Nezha Auto's Nanning factory is fully ensuring the production of models like the Nezha AYA and Nezha X. According to plans, Nezha Auto also intends to establish more than 10 stores in Brazil in the first quarter of 2025. As of January 15, 2025, a new store opened by Nezha Auto in West Java, Indonesia, has officially commenced operations, marking the first overseas dealership investment by Nezha Auto after the new year.

Additionally, Nezha Auto recently held an overseas dealer conference where relevant executives introduced the company's overseas layout in detail. In 2024, Nezha Auto's cumulative orders in overseas markets approached 30,000 units, with its sales channels (dealers) growing to 184, spanning major global markets like Southeast Asia and Central and South America. According to the brand's plan, in 2025, Nezha Auto will continue its efforts in overseas markets, aiming to double its annual sales, further enhance brand recognition and user satisfaction, and win the favor of overseas consumers through localized team management and production models.

Is Rebirth Possible?

However, this does not guarantee that Nezha Auto has returned to the right track. According to Qichacha data, on December 23, 2024, Fang Yunzhou's equity of 19.86 million yuan was frozen by the People's Court of Tongxiang City, Zhejiang Province, with Hozon Auto as the equity freeze target enterprise. Recently, Nezha Auto, or Hozon New Energy Auto Co., Ltd., was subject to enforcement of approximately 5.4552 million yuan, with the enforcing court being the People's Court of Tongxiang City, Jiaxing City, Zhejiang Province. Additionally, the company and its legal representative, Fang Yunzhou, were restricted from high consumption due to a sales contract dispute with Dongfeng Yanfeng Automotive Cockpit Systems Co., Ltd.

'Today, Nezha Auto, which has been in business for ten years, stands at the crossroads of a phoenix rebirth,' Fang Yunzhou stated in an open letter. He emphasized that Nezha Auto's path would not involve deep internal competition or self-consumption but rather high-quality and sustainable development. Establishing a global expansion based in China is the answer to Nezha Auto's 'second startup'.

Fang Yunzhou explained that this was the result of careful consideration. Deeper still, this 'second startup' is not just about Nezha Auto's survival but also reflects the transformation pain of Chinese new-force enterprises transitioning from 'wild growth' to 'intensive cultivation'.

Previously, market research institutions indicated that there were over 400 domestic new-force enterprises in the automotive industry, with the competition centered on who could mass-produce the first car. As of last year, only a fraction of these persistent new-force enterprises remained, and the competition among them has shifted to who will be the next profitable new-force brand after NIO, XPeng, and Li Auto.

Taking Zero Run Auto as an example, even though the brand achieved both sales and performance success in 2024, it still failed to turn a profit. A poignant line from the film 'Nezha 2' resonates: 'Prejudice in one's heart is like a mountain that cannot be moved no matter how hard you try.' As NIO, XPeng, and Li Auto build high walls with technological barriers, and traditional automakers crush the fuel vehicle race with scale advantages, market competition becomes increasingly fierce, with price wars erupting one after another. How should struggling 'Nezha's' seek their own 'phoenix rebirth'?

This may be the most accurate portrayal of the current Chinese auto market. After watching 'Nezha 2', Fang Yunzhou wrote: 'In 2025, the situation is uncertain, and you and I are all breakers of the deadlock. Let's see Nezha Auto stir up the four seas and eight wildernesses and write a new chapter.'

Perhaps, as Fang Yunzhou emphasized, only by displaying the Nezha spirit of 'my destiny is in my own hands' and the unyielding fighting spirit of 'if there is no path ahead, I will pave one', can one truly 'pave a path' and achieve a phoenix rebirth in the context of the new era. If Nezha Auto can truly turn the tide in 2026, it may also inspire more peers to courageously break the deadlock amidst the tide of change and jointly write another new chapter in China's automotive industry.

Note: This article was originally published in the 'Auto Observation' column of the March 2025 issue of 'Auto Review' magazine. Please stay tuned.

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Article: Auto Review

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