Half a year has transpired since Chinese electric vehicle startup WM Motor submitted its application for a public listing, but a lack of progress with those plans has caused it to consider alternative paths. A company insider told Chinese media outlet Mingjing Pro that the company is studying the use of a reverse merger to carry out an IPO in Hong Kong or elsewhere.
WM Motor began to prepare for a listing in Shanghai in 2020 and suspended the IPO as many problems were found in the review of its listing materials. It was questioned about insufficient scientific and technological content, low R&D investment and continuous losses.
WM Motor quickly responded that it was waiting for an IPO under the tightening listing policies. However, after that, there was no new progress until June 2022, when it started listing in Hong Kong. According to the plan at that time, if all went well, it would complete the listing in the second half of this year. Now there is only one month left in 2022, meaning that it will be too difficult for WM Motor to achieve this goal.
WM Motor only sold 44,000 vehicles last year, and less than 30,000 vehicles in the first 10 months of this year. Although its operating income gradually increased from 1.762 billion yuan in 2019 to 4.743 billion yuan in 2021, the growth rate is far less than that of its competitors. For example, the revenue growth rates of XPeng in the last two years were 151.78% and 259.12% respectively.
From 2019 to 2021, WM Motor’s net loss rates were 235.2%, 190.3% and 173.0% respectively. In 2020, it started large-scale financing, which expanded to 1.8 billion yuan at the end of the year and further expanded to 4.1 billion yuan in 2021.
In October, news emerged that the firm had decided to reduce financial pressure by reducing employees’ salaries. On November 21, Freeman Shen, WM Motor’s chairman and CEO, wrote an open letter to employees, showing that, starting from October, senior managers will reduce their salaries by 50%. Other employees will be paid 70% of their basic salary, while no extra bonuses, retention bonuses, year-end bonuses, or car purchase subsidies will be paid this year.
SEE ALSO: WM Motor to Cut Executive Salaries in Half as Financial Woes Mount
However, some employees said that WM Motor itself had not encountered a fatal crisis. “In fact, there are currently tens of billions in funds waiting to be invested in the company, but it is not very cost-effective.”
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