1 July 2020
Chinese electric vehicle (EV) startup Byton is today suspending production in the wake of coronavirus (COVID-19), and apparent ensuing financial difficulty. The suspension looks to last for at least six months as the company carries out a reorganisation.
Backed by state-owned carmaker FAW Group and battery manufacturer Contemporary Amperex Technology Co Ltd, Byton produces EVs at its Nanjing plant. These operations will be suspended for the rest of the year, including research and development projects.
‘The new coronavirus epidemic has brought great challenges to Byton’s financing and production operations,’ the EV maker stated, as reported by Reuters.
‘After careful consideration and joint consultations with our shareholders and management, we have decided to, from July 1, kickstart a plan to lower employee costs and promote the company’s strategic reorganisation,’ Byton confirmed.
The company also stated it was raising funds to address issues relating to unpaid staff salaries. Byton said it hoped to start paying employees from July. Reports are suggesting that the carmaker is behind on up to four months of employee salary payments.
Byton furloughed hundreds of its workers at its US headquarters in Silicon Valley in April, due to the impact of COVID-19. ‘Our production schedule will undoubtedly be affected. We are evaluating that impact,’ a spokesperson told Electrek at the time.
Founded in 2017, the Chinese company was considered to be one of the more promising EV startups that had arisen to challenge the likes of Tesla. Byton completed its third round of funding in January 2020, with the Japanese conglomerate Marubeni not only invested but also forming a strategic partnership with the start-up.
At this year’s CES the carmaker also revealed that pre-orders for the M-Byte SUV had reached 60,000. Deliveries were supposed to begin in China late this year. Prior to the COVID-19 pandemic, Byton looked to be on track to meet this deadline. A 2021 delivery date had also been set for the European market. But now with the EV company bowing out of the rest of 2020, whether it re-emerges in 2021 is up for debate.
China’s EV demand
As startups like Byton struggle to ride out the storm, major automotive manufacturing groups are cementing China as key to their COID-19 comebacks. Alongside mounting pressure to go green, Volkswagen Group, for example, identified China as the world’s biggest market for e-mobility.
This runs in parallel with the country’s desires to curb air pollution and boost its own car industry. Plans for new energy vehicles (NEVs) to account for some 25% of automotive sales by 2025 have been announced in China, which would be a considerable increase from the current 5%. NEVs include battery-electric, plug-in petrol-electric hybrid and hydrogen fuel-cell vehicles. Back in May, China’s largest automotive industry association reported that sales of NEVs had fallen for the 11th month in a row, down to 82,000 units.