Byton has been reportedly not paid employees, following a furlough of half its US operation.
Why it matters: The latest setback echoes a long-standing concern that Byton, once considered a serious contender for leadership in the Chinese EV market, is falling behind major rivals.
- Byton in November pushed back the launch of its first mass-production SUV model M-Byte by 6 months to mid-2020, and has yet to close its Series C funding (in Chinese), from which it has planned to raise totally $500 million since mid-last year.
Details: Multiple employees from Byton’s China headquarter in the eastern city of Nanjing said they have not received March salaries and still don’t know when they will get paid, Chinese media reported on Wednesday citing people familiar with the matter.
- Byton has delayed payment in different proportions to Chinese employees, as part of the temporary measures to reduce fixed cost, according to an announcement sent to TechNode on Wednesday.
- Byton’s China offices are still open.
- Around half of the 450 employees from its office at Santa Clara, California, are facing a furlough.
- The management team will take 80% pay cuts and use their own money in the Series C, the company wrote, which laid the blame on the “huge challenges” it has been taking amid the worldwide coronavirus outbreak.
- Byton has been on the hunt for new cash infusion for more than two years, seeking to raise a total of $500 million at a valuation of more than $2.5 billion in its Series C led by state-owned automaker FAW.
- CEO Daniel Kirchert in September announced the cash was “almost in place” from investors including FAW and a government-backed capital firm. However, no updates have been further disclosed. A spokesperson on Wednesday said several prospected investors are “in due diligence.”
- Byton is planning to deliver its first electric SUV model in Europe including Germany and Switzerland in 2021 and to begin taking pre-orders in the second half of this year.
Context: Byton is not the only Chinese EV maker struggling to stay afloat in an extended market slump.
- Tesla’s Chinese rival Nio in late February announced a funding project of more than RMB 10 billion (around $1.4 billion) from the government of the eastern Hefei city. The two parties were expected to close the deal by the end of this month.
- Meanwhile, the government of central Henan province last month poured RMB 2.02 billion for a 60% stake in Reech Auto, a Shanghai-based EV startup, TechNode learned according to figures from Chinese business research platform Tianyancha.