Text/Lu Shiming
Edit/Gale
Recently, some netizens posted news that WM Motor has implemented a policy of leaving all employees without pay, and there is no compensation. The screenshot of the online chat shows that the marketing department of WM has been notified not to work from home and there is no N+1 compensation.
On February 14, WM Motor responded that it "did not receive this news." However, a number of WM Motor marketing system personnel said that the company's top management is discussing two plans, one is that some employees stay without pay, and the other is that the budget of all departments is reduced by 25%. In addition, a number of R&D system personnel of WM said that although they did not receive the information of leave without pay, the company has been notified that they do not need to go to work.
Since its establishment in 2015, this Weima running on the new energy track has finally become a "dangerous horse". Sales are falling rapidly, financial situation is tight, left-hand quality problems are constant, right-hand road to market is bumpy, and it is a lawsuit and a lawsuit, WM has come to this day not overnight, but the result of every "mistake" in the past eight years.
Even if it is in dire straits, WM cannot "disappear" and cannot "disappear". On the one hand, through the commercial operation of reverse takeover, WM may be able to go public and draw life-saving funds from the secondary market. On the other hand, after several years of development, the WM models on the market have a certain scale, once they "disappear", what should be the after-sales problems of car owners?
Therefore, WM must live, and only by living can there be hope for everything. However, in this stage where the national supplement is canceled and market players have killed the red eye, even if they survive, the Weima who got off the table will only become a marginal role, just like Lifan back then, or the former Zotye.
Regardless of the outcome of WM, its current situation shows a fact. 2023 is the year of the reshuffle of the new energy vehicle track, the brutal knockout has begun, someone will stay, someone will leave.
Salary cuts to no pay, it is difficult to find new blood
WM's "all employees without pay" incident, whether true or false, I believe most people in the industry will not be surprised. After all, Weima has long been disciples and penniless.
As early as March 2020, netizens claiming to be employees of WM Motor broke the news on social platforms that WM held an online conference call to discuss the issuance of year-end bonuses to employees, and the company's personnel department notified all employees to cancel the year-end bonus, and the 13th salary was extended to June of that year. In response to the reason for canceling the year-end bonus, the explanation given by the personnel department of WM was that "last year's KPI did not meet the standard".
Then in October last year, shortly after the "Shen Hui's annual salary of 1.2 billion", WM Motor was exposed to serious financial problems and will carry out a series of active financial policies.
This information was quickly confirmed. On November 21, 2022, Shen Hui, CEO of WM Motor, issued an internal letter to all employees, saying that in order to cope with financial pressure, the company's management took the initiative to cut salaries by half, while streamlining the company's overall operating expenses, and will reduce operating costs through a series of financial measures such as delayed salary payment, 70% basic salary for employees, and cancellation of employees' year-end bonuses.
Freezing three feet is not a day's cold, WM has gradually shown a trend of falling behind since the highlight of the new force "Old Two" in 2019.
In 2020, WM delivered a total of 22,495 units, ranking fourth among emerging automakers. In 2021, WM Motor ranked fifth with 44,157 deliveries. In 2022, WM Motor will only deliver 29,450 units, a year-on-year decrease of 33.3%, completely out of touch with "Wei Xiaoli".
The continuous decline in sales of WM Motor is inseparable from frequent quality problems. In September 2019 and October 2020, spontaneous combustion incidents of WM Motor occurred in many places in China. has not yet broken free from the whirlpool of public opinion, and in 2021, WM became a heavyweight guest at the 3·15 party because of "locking electricity".
If you can't sell the car, where will the money come from to pay salaries? When it was poor, WM did not forget the secondary market full of "new blood". Since 2020, Shen Hui has set his sights on Hong Kong stocks, and it was not until June last year that WM submitted an application for Hong Kong stock listing. It is that prospectus that lets people know that WM not only has great energy to "burn", but also huge energy to "lose".
According to the prospectus released by WM in September 2022, from 2019 to 2021, WM's losses during the year reached 4.145 billion yuan, 5.084 billion yuan and 8.206 billion yuan respectively, and the amount of losses in the past three years continued to increase, with a cumulative loss of 17.435 billion yuan.
Source: WM Prospectus
If the news before 2022 is not enough to prove WM's "hard days", then the losses in the above-mentioned internal letter and prospectus fully expose the operating difficulties faced by WM Motor.
Perhaps for the majority of Weima owners, just when Shen Hui was hesitant, the national team sent warmth. At the end of last year, WM received investment from state-owned enterprises in Mianyang, and the registered capital of WM Automotive Technology (Sichuan) Co., Ltd. increased from 170 million yuan to 520 million yuan.
Unfortunately, the house leak coincided with overnight rain, and less than half a month later, a judgment from the Shanghai Higher People's Court gave Weima a hard blow.
According to the judgment of the Shanghai Higher People's Court, WM Motor lost the first instance and needed to compensate Geely 7 million yuan. In addition, WM wants to stop using the five auto parts drawings used on EX5 models. Since Geely sued WM in 2018, the industry's attention to this 2.1 billion yuan sky-high claim case has never stopped for more than four years.
In terms of the outcome of the case alone, Geely will most likely not get this compensation, and there will be no loss to WM without the relevant drawings, and neither party is necessarily a winner. However, compared with the huge Geely, today's WM is really "not worth mentioning".
Left hand to right hand, or will be listed
The listing completed a new round of financing, which became one of the few life-saving straws left for WM Motor at that time.
However, according to the regulations of the Hong Kong Stock Exchange, the prospectus will be invalidated for companies that have not completed the hearing process more than 6 months after submitting the IPO information. Moreover, under a series of negative news such as subsequent sales decline, salary cuts, layoffs, store closures, and lawsuits, WM's listing application is naturally invalid.
If WM wants to continue the listing process, in addition to facing supplementary submission of materials and re-examination, it must announce the true financial situation of the first three quarters of last year before March 1 this year. This is naturally the next strategy for WM, which is too poor to open the pot, and the upper strategy is to go public through the backdoor.
On December 5 last year, Apollo Mobility, a shareholding enterprise of WM Motor and a Hong Kong listed company, announced that it intends to acquire a smart electric vehicle company. The target company's business covers a series of smart electric vehicles equipped with advanced technology, targeting young and tech-savvy users in China. For the announcement, the industry generally believes that this potential acquisition target of Apollo Mobility is WM Motor.
Sure enough, on January 12, Apollo Smart Mobility announced on the Hong Kong Stock Exchange that the company had completed a strategic merger with WM Motor on January 11, and the company would acquire all the issued share capital of WM Holdings' subsidiaries for US$2.02 billion, which would be settled by allotment of 28.8 billion shares at HK$0.55 per share.
Source: WM Motor public number
It is understood that the transaction adopts the price-to-sales ratio calculation method, with WM's sales revenue of 4.74 billion yuan in 2021 and the price-to-sales ratio of about 3.9 times of Hong Kong new energy vehicle stocks, and the valuation level of WM's 3.7 times is generally within a reasonable range. For comparison, NIO is 3.3 times; Xiaopeng is 1.9 times, ideal is 4.3 times, and Zero Run is 6.1 times.
It is worth noting that in the previous Hong Kong stock prospectus, WM's post-investment valuation was US$7.04 billion. The consideration for the acquisition of WM by Apollo Mobility is US$2.023 billion, which means that the valuation of WM Motor has shrunk by 71% compared with the previous period.
Valuations without liquidity don't make much sense, and what's really interesting is that it's a classic capital operation.
The predecessor of Apollo Smart Mobility is the German niche supercar manufacturer Gumpert. In 2007, Gumpert launched its first model, Apollo, but in 2012, due to the rupture of the capital chain, Gumpert declared bankruptcy, and was later acquired by a Hong Kong investment company and renamed Apollo. Shen Hui, the founder of WM, is the co-chairman and non-executive director of Apollo Smart Mobility, and WM holds 23.66% of the shares of Apollo Smart Mobility, which is the largest shareholder of Apollo Smart Mobility.
Such an operation is known in the capital market as a backdoor listing. Simply put, it means that the shareholders of a non-listed company control the company by acquiring the shares of a listed company, and then the company reversely acquires the assets and business of the non-listed company, making it a subsidiary of the listed company, so as to achieve the purpose of indirect listing.
Shen Hui's wave of "left hand to right hand" allowed WM to list more quickly, thereby obtaining the authority to raise funds in Hong Kong stocks and absorbing more funds to ensure that WM "lived". According to many industry insiders, WM is very likely to complete the listing in the second quarter of this year.
In order to successfully complete the subsequent listing, WM also made the decision to improve the company's profit structure. That is, from 2023, the price of many models on sale such as W6, EX5-Z, and E.5 will be adjusted, and the adjusted price will increase by 15,000 yuan to 25,000 yuan, thereby increasing the gross profit of bicycles. However, the increase in model prices will inevitably face the risk of another decline in sales.
The secondary market may be able to quench the thirst for a while, but it cannot quench the thirst for a lifetime. WM must start from the aspects of brand positioning, product quality, and after-sales service, and truly solve the "root" problems, which may usher in a turnaround.
The track is shuffled, and WM is just the beginning
One point of view is that even if we are optimistic, it is difficult for WM after the backdoor listing to return to the highlight moment of "one of the four tigers of car manufacturing".
Under the 2022 national subsidy policy, the subsidy for plug-in hybrid vehicles is 4,800 yuan, the subsidy for new energy vehicles with a cruising range of 300-400 kilometers is 9,100 yuan, and the subsidy for those with a cruising range of more than 400 kilometers is 12,600 yuan. The national new energy vehicle purchase subsidy policy will end on December 31, 2022, after which the licensed vehicles will no longer be subsidized.
New energy subsidies, which have been implemented for more than ten years, will officially withdraw from the historical stage from this year, which will not only dampen consumers' enthusiasm for buying cars, but also face the problem of "sales" for car companies that rely heavily on subsidies, and the price advantage established by the national subsidy will no longer exist.
But the market is going to be weaned after all, and the major forces have come to the time when they really want to fight bayonets.
It can be seen that before and after the withdrawal of the national supplement, including BYD and GAC Aion, many new energy vehicle brands that "do not worry about orders" have successively issued price increase notices, but there are also car companies such as Tesla, Extreme Krypton, and Qianjie who have cut prices in turn for the sake of sales.
Car companies like WM, which have fallen behind and have a huge funding gap, have no longer aimed at how many cars to sell and how much market share they occupy, but how to "survive".
In the recent price adjustment announcement, WM Motor also said that the sudden change in the domestic and foreign market environment in 2022 will bring great challenges to new car companies that have not yet made profits, and "survival" has become the consensus of the industry, and "profit" has become the goal of pursuit. Not only the company's announcement, but Shen Hui, as the founder, also posted a classic line from the 80s movie "Furong Town" on Weibo: "Live, live like an animal." ”
Source: Shen Hui Weibo
The sentence of living is generally interpreted as Shen Hui's inner monologue about the current situation of WM Motor. But what about WM? 2023 is destined to be a year of reshuffle in the new energy vehicle market, and this reshuffle begins with WM. Those car companies that once relied on policy dividends to "fish in troubled waters" in the market will inevitably become naked swimmers after the tide recedes.
As for those players who are still at the table, it must be clear that under multiple factors such as subsidy cancellation, price war, and lack of chips and expensive electricity, if you want to survive in an increasingly severe market environment, you should actively satisfy consumers from the aspects of research and development and service, otherwise it will be the next WM.
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