As Chinese electric vehicle (EV) maker Byton drags its feet on paying up to four months of employee salaries, Chinese media outlets (in Chinese) report that nearly 100 employees gathered in Nanjing on June 23 to demand pay. Meanwhile, the company’s factory and offices appear to be shuttered—although the company claims that’s by choice.
Why it matters: Byton has struggled to close its Series C funding round, which it told Chinese media was “almost in place” as early as September 2019. Its falling behind in wage payments is evidence of deepening financial woes.
Missing pay: According to a report by Future Auto Daily (in Chinese), the company owes RMB 90 million (US$13 million) in wages to over 1,000 employees.
- Byton has reportedly withheld salaries since March 2020, when it furloughed half its US employees.
- Per Future Auto Daily, those cuts have only been extended, with payments stopped to employees’ social security funds too.
- Facing employee discontent, Byton promised in a June 23 company meeting to pay out one month of salaries, but did not provide a date for doing so.
- Byton told TechNode that concrete arrangements would be communicated to staff upon approval by the Board of Directors at the end of June.
Missing rent? Meanwhile, Chinese language media report that Byton cash crunch has led to office and factory closures, although the company claims the closures are voluntary.
- Jiemian (in Chinese) reports that Byton’s Shanghai and Beijing offices are shut due to not paying rent, and its Nanjing factory likewise due to not paying utilities.
- In a statement to TechNode, the company acknowledged the closure of these facilities, but denied that a lack of payments was the reason.
- “Our Nanjing factory is currently on leave due to high temperatures and the Dragon Boat Festival, and will resume work on the 28th,” a PR representative told TechNode.
- “Our leases are up in Shanghai and Beijing, and we are searching for suitable office spaces. During the transition period, employees in these two locations will temporarily be working remotely,” the spokesperson added.
Context: Though Byton’s financial difficulties are especially pronounced, it’s not the only one in the industry struggling—an industry-wide slowdown means that many other Chinese EV companies have their own troubles.
- Beyond its missing $500 million Series C funding round, one reason for Byton’s financial troubles is its decision to take on RMB 850 million of debt late in 2018.
- China’s EV market has felt a double whammy first from subsidy cuts and secondly from the Covid-19 pandemic, with new energy vehicle (NEV) sales falling 77% year-on-year in February 2020.
- They’ve rebounded somewhat since then, being down 23.5% year-on-year in May 2020, but competition in the market remains intense.