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Human Horizons, a Chinese maker of luxury electric vehicles, has become the latest victim of the cutthroat market, halting production of its cars amid a capital crunch.
The Shanghai-based company told its employees on Sunday that it was implementing a six-month suspension of its luxury HiPhi brand, effective immediately, according to local financial media outlet Jiemian.
Human Horizons declined to comment when contacted by the Post on Monday.
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Two sources with knowledge of the electric car maker's operations said the company was not able to pay its employees their salaries in January.
The decision to stop assembling its expensive cars priced above US$80,000 came after Human Horizons failed to turn its business around amid a slowdown in the Chinese EV market that may force smaller carmakers to fold.
"HiPhi's crisis exacerbates the bearish sentiment about Chinese EV companies' performance," said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. "More small players will have to close down their businesses as competition escalates."
Human Horizons rose to global prominence last summer when it agreed to establish a US$5.6 billion venture with Saudi Arabia's investment ministry to conduct automotive research, development, manufacturing and sales in the Middle Eastern country.
It is not clear whether the company's problems in mainland China will affect its venture in Saudi Arabia, which has not started operations yet.
HiPhi, founded in 2017, currently builds and sells three models in China, all of them under the HiPhi brand name.
Ding Lei, founder and CEO of Human Horizons, told local media in 2022 that the company had more than 5,000 employees.
HiPhi does not publish delivery data. It does not feature in lists of China's top 15 EV makers by monthly sales, according to data from the China Passenger Car Association (CPCA).
In October, the company denied a market rumour that it would cut its workforce by 20 per cent and said its operations remained normal.
EV makers sold 8.9 million vehicles to Chinese buyers last year, a 37 per cent year-on-year increase, according to the CPCA.
But sales growth in the country could slow to 20 per cent this year, according to a forecast by Fitch Ratings last November.
China is the world's largest automotive and EV market, with sales of battery-powered cars accounting for about 60 per cent of the global total. But only a few makers, including BYD and Li Auto, are profitable.