'Red Ocean' Chinese Electric Vehicle Market, Restructuring Accelerates... Weilai Cuts 10% Workforce

Aftermath of Rapid Growth... Even Top Companies Shaken
Layoff Wave Expected to Spread Across Industry

The Chinese electric vehicle manufacturing market is suffering from the aftereffects of rapid growth. Following the restructuring of numerous companies that had proliferated thanks to government subsidies and surging demand, even top-tier companies are now cutting staff to reduce costs.

According to Chinese local media such as Pengpai News on the 5th, Li Bin, chairman of Chinese electric vehicle company Weilai (NIO), announced a restructuring plan on the 3rd to reduce 10% of the total workforce through an internal letter. With a total workforce of about 27,000 employees, the estimated number of affected employees is around 2,700.

In the letter, Chairman Li emphasized, "The next two years will be the most intense competitive period during the automotive industry's transformation," adding, "The external environment is full of uncertainties." He stated, "We must further improve execution efficiency and ensure sufficient resources are secured for core businesses," and added, "We need to seize opportunities for organizational optimization, cost reduction, and efficiency improvement."

Along with this, he proposed merging overlapping departments and positions, reforming inefficient internal work processes and labor division, and postponing or scaling down investments in projects that cannot improve financial performance. He did not specify which departments or projects would be targeted.

Chinese economic media Caixin pointed to the battery business as a struggling project. Chairman Li had said in June last year that "batteries produced in-house will be installed in mass-produced vehicles in 2024," but in July, the battery production plan was announced to be delayed. Caixin cited a source familiar with the situation, stating, "Weilai wanted to mass-produce semi-solid battery cells, but the investment scale may have caused the delay."

Locally in China, there are forecasts that this wave of layoffs will continue for some time. Considering that Weilai ranked 6th in electric vehicle sales last month (deliveries of 16,074 units) and that cumulative deliveries this year have reached 126,067 units, a 59.8% increase compared to the previous year, this outlook seems even more likely.

Previously, WM Motors, which had rapidly emerged as a new strong player alongside Weilai, applied for pre-restructuring through the court, and Aiways, the first Chinese electric vehicle company to enter Europe, has halted factory operations due to poor sales, with most employees quitting the company due to unpaid wages.