Human Horizons Group Inc., a prominent Chinese electric vehicle manufacturer known for its premium HiPhi brand, has recently made the decision to suspend operations for a period of at least six months. This move comes amidst the backdrop of a noticeable slowdown in the electric vehicle industry in China, where growth has been tapering off due to dwindling consumer demand and escalating trade tensions affecting export prospects.
The company's decision to halt production was implemented suddenly, with workers being barred from entering the factory starting from Sunday. Employees have been informed through a memo that their wages for January will be paid at the end of the month, but subsequent payments from February to March will be at a reduced rate of 70%. After this initial period, salaries will be further reduced to minimum wage, signaling a challenging financial situation for the company. Additionally, workers who wish to maintain their contributions to the national medical insurance plan have been advised to resign by a specified date, indicating potential difficulties in upholding social welfare commitments.
Reports indicating financial strain on Human Horizons have been circulating, with claims of store closures in various cities and delayed payments to suppliers. Despite these challenges, the company had previously denied any operational issues. However, the decision to suspend operations and the subsequent actions taken suggest a more serious predicament for the once-promising electric vehicle manufacturer in China.
The pressures faced by Human Horizons are reflective of the broader challenges confronting smaller players in the competitive EV market, where intense competition and a drying up of subsidies have led to a significant consolidation of industry players. With the number of registered EV producers in China decreasing substantially in recent years, many companies have been forced to exit the market entirely. Despite offering EV models priced between 339,000 yuan to 570,000 yuan, Human Horizons' sales figures remained modest, with less than 8,000 vehicles sold in 2023.
The financial uncertainties surrounding Human Horizons also raise questions about the viability of a significant collaboration agreement it entered into with Saudi Arabia's Ministry of Investment. The $5.6 billion deal, finalized in June last year, was intended to facilitate joint efforts in the development, manufacturing, and sales of electric vehicles. However, with the company's current challenges, the future of this partnership and the company's overall trajectory remain uncertain.