Jidu Auto, a rising star in the Electric Vehicle (EV) sector, grabbed headlines just a few months ago with the launch of its second model. However, the company abruptly announced massive layoffs and the closure of its operations this week, stirring concerns about an impending shakeout in China’s EV industry. “It’s over. Don’t watch anymore; we’re shutting down. Just leave. Yes, our car company has gone bankrupt. It happened today. Leave quickly,” declared a Jidu Auto live stream host tearfully, highlighting the shock and devastation among the employees.
On December 13th, BYD and Geely released a joint statement revealing that Jidu Auto would undergo layoffs and cease operations. The statement cited “tremendous changes” in the industry’s competitive landscape, making the current business plans unviable and posing significant operational challenges. They also assured that proper maintenance, repair, and servicing of Jidu vehicles for existing users would continue.
Just two days prior, on December 11th, social media videos surfaced showing Jidu Auto’s sudden shutdown, with mall security cordoning off its showroom. By December 12th, Chinese media outlets, including GMN News, reported that several departments within Jidu Auto had abruptly announced their dissolution. Concerned that the executives might flee, numerous employees gathered at the headquarters to confront CEO Chen Yiping, demanding overdue social security, medical insurance, housing funds, December wages, and severance compensation. Reports indicate that the company hadn’t paid social security contributions since November.
Employees, now owed wages, began live streaming as they removed office supplies and equipment as a form of self-compensation. One live streamer reported that after the announcement, employees started taking items from the offices and stores to compensate for unpaid wages.
On the afternoon of December 12th, CEO Chen Yiping held an internal meeting, stating that the company’s accounts had been frozen but assuring staff he wouldn’t flee and was actively seeking funding. Just ten days earlier, on December 2nd, Jidu Auto had denied bankruptcy rumours, claiming operations were entirely normal. This sudden collapse shocked many, given Jidu Auto’s robust backing from major players BYD and Geely.
The Rise and Fall of Jidu Auto
Official data shows Jidu Auto was jointly established by BYD and Geely in January 2021, with BYD holding a 55% stake and Geely the remaining 45%. The company initially promised to create robot cars. In June 2022, it unveiled its first concept vehicle, the Robo-01. However, by August 2023, due to production licensing issues, Jidu Auto rebranded and saw Geely’s stake increase to 65%, while BYD’s holding dropped to 35%.
Despite its ambitious goals to compete with Tesla, Jidu struggled in the market. Sales figures for its first model, the J-01, remained disappointing throughout the first half of 2024, with monthly sales barely exceeding 1,000 units—218 units in January, 147 in February, 511 in March, 362 in April, and 101 in May. Only after July did sales improve slightly, peaking at 317 units in October. Compared to competitors, these numbers were meagre, with some EV brands achieving similar volumes weekly.
Sam Fany, Vice President of Auto Forecast Solutions, a Pennsylvania-based automotive industry data and forecasting firm, told Radio Free Asia that Jidu’s market exit was partly due to a mismatch between production plans and actual demand. Manufacturers had anticipated explosive growth in EV demand, but the market hadn’t met those expectations.
In September 2024, Jidu launched its second model, the Jidu-07, with over $137.3 million invested in its development. However, reports of overdue payments to suppliers soon emerged, and rumours spread that shareholders had decided to halt further investments and shut down vehicle production operations.
Internal sources revealed Jidu had over 5,000 employees, including regular staff and contractors. Reports suggest the company planned to dissolve its R&D department entirely and retain only 80 of its 300 employees in the after-sales department. Disgruntled employees were given two options: voluntarily resign with compensation equal to one month’s salary plus a severance package (N+1) payable by the end of February 2025, though this wasn’t guaranteed due to financial constraints, or stay with the company knowing that wages would stop from December 2022 and social security payments would cease, effectively meaning they would work at their own expense.
Protests have continued over the past two days. According to the International Financial News, Geely and BYD facilitated payments to cover Jidu’s November social security contributions on the evening of December 12th, but negotiations with suppliers remain ongoing. Suppliers have also been severely impacted. A human resources provider for Jidu expressed frustration, stating they were owed tens of millions of yuan, with some invoices dating back to April last year.
Reports indicate Jidu owes over $119 million to 50 suppliers, with individual debts ranging from $6.3 million to over $13.7 million. Internal sources suggest the actual number of affected suppliers and the total debt could be even higher. Jidu Auto’s sudden collapse has sent shockwaves through China’s EV industry. Employees and consumers are anxious about their future, while industry insiders worry that many new EV start ups lack the necessary resources and long-term planning to survive. As one observer noted, the industry is now littered with failed dreams and unsustainable ambitions. The shakeout in China’s EV industry may just be beginning, and it remains to be seen which companies will endure the brutal survival stage predicted by Nio’s founder, William Li.