Geely-Baidu JV Scaling Down For Survival

As part of a larger restructuring that "has been fully supported" by significant shareholders, Chinese electric car startup Jiyue is laying off an undisclosed number of workers to eliminate redundant positions, according to an email issued to colleagues on Wednesday by chief executive Joe Xia.

The firm, which is a joint venture between Volvo parent Geely and Chinese search engine giant Baidu, said in a separate statement posted on the Chinese microblogging site Weibo that it is looking for additional finance, has temporarily postponed loan payments, and would postpone some car deliveries.

However, in order to examine fixed asset management, corporate insiders told local media outlet Jiemian that all of its employees in the R&D team will be let go, and showroom test drives will be halted. According to the news, major investors Baidu and Geely may also cease providing funds for the three-year-old startup's development.

Last month, Jiyue reported 2,485 automobile deliveries, increasing its annual delivery total to little over 14,000 units. In 2021, Baidu and Geely established their first joint venture, Jidu Auto, with a 55% and 45% ownership stake in the business, respectively. The following year, they raised an additional $400 million for funding. But in August of last year, Geely and Baidu formed a new joint venture with a new brand named Jiyue, in which they both own 65% and 35% of the shares. This move made it possible for Baidu to contract with Geely to manufacture cars.

Following this, the Jiyue 01, the brand's debut model, was released. An extreme price reduction for the car was subsequently announced by Jiyue a month later. The Jiyue 07, the brand's second model, was introduced in September and promised a cheaper, smarter driving experience akin to Tesla's.

Due to its inability to attract new investors and its huge debt to suppliers and vendors, Baidu and Geely's joint brand is the most recent Chinese electric car manufacturer to have financial difficulties. According to local media, Neta Auto, also known as Hozon in China, has just started layoffs and been sued for late payments after finding it more and more difficult to pay employees' salaries.