The scene was one of stark contrast at the headquarters of Geely Electric Vehicle (Gevay) in Shanghai on December 12. While the CEO, Xia Yiping, had just delivered an internal memo the day before, outlining the company's shift into a "Startup 2.0" phase and acknowledging its challenges, things were rapidly deteriorating outside the boardroomInside the company’s offices on Ye Cheng Road, Gevay employees were barricading the entrance, demanding answers about the company's sudden dissolution and severance plans.

Xia Yiping, facing the crowd, promised his employees that he would not "run away" and that he was actively working on solutions, urging them to give him more timeHowever, the words seemed hollow against the backdrop of the company’s stated vision: "In the history of China's smart automotive industry, every Gevay employee's name will be remembered." The contrast between the company’s optimistic rhetoric and the unfolding reality was jarring.

Just a day earlier, Gevay had been surrounded by rumors of large-scale layoffs, unpaid live-streaming service fees, and an impending collapse

In an attempt to quell the growing unrest, Xia Yiping held a video conference with all employees, acknowledging that the company was in a difficult positionHe announced that Gevay would be undergoing significant adjustments and that the company would enter "Startup 2.0," focusing on four key areas: long-term investment in core technologies, strengthening sales and service capabilities to combat market competition, merging redundant departments and positions, and eliminating inefficient internal workflowsHe also addressed financial concerns, stating that the company was actively working on financial adjustments and planned to resolve its payment obligations in an orderly manner.

Despite these reassurances, the situation quickly spiraled downwardAccording to an employee of Gevay, the HR department began speaking to employees after the video conference and presented them with two options: voluntarily resign by December 16 and sign a compensation agreement, with severance to be paid by February 15 of the following year (though it was not guaranteed due to the company’s cash flow issues), or take unpaid leave without social security or housing fund contributions

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This sudden turn of events, combined with the lack of prior notice about the company’s dissolution, left employees angry and disillusioned. 

One employee, who chose to remain anonymous, noted that many of Gevay’s staff members were particularly affected by the company’s failure to pay social security and housing funds in November"This interruption in payments will severely impact employees working in cities like Shanghai and Beijing, as it could affect their household registration, housing purchases, and other critical aspects of their lives," the employee explainedIn response, Xia Yiping admitted that the company was facing a cash flow shortage and could not meet its social security and tax obligationsHe offered employees the option to self-pay for social security if needed and encouraged them to discuss the details with their direct supervisors or HR.

On the same day, the promise that Gevay's "channels would operate normally" also fell apart

Reports emerged that Gevay’s showrooms had been closed, with test drive vehicles locked and awaiting further instructionsA staff member from one of the company’s showrooms confirmed that, after receiving the internal memo on December 11, they were informed during a video meeting that they would not be working the following dayFor many employees, the news of the company's closure came as a shockWhile there had been internal speculation about restructuring and adjustments, no one had anticipated such an abrupt end.

According to some reports, the sudden dissolution of Gevay was triggered when one of its investors, Baidu, conducted an audit before committing further investment, only to discover a financial hole of nearly 7 billion yuanAs a result, Baidu decided to pull out, and Geely, which had been manufacturing vehicles for Gevay, also halted production due to outstanding payments

The company's inability to generate consistent revenue and its failure to establish a solid customer base had left it vulnerable. 

Gevay, a joint venture between Baidu and Geely, has been struggling with financial difficulties for some timeIn the first eleven months of this year, Gevay had delivered just over 14,000 vehicles—far below the monthly sales figures of other prominent new energy vehicle manufacturers, such as Li Auto and the AI brandIn an attempt to boost the company’s visibility, Xia Yiping personally spearheaded a marketing campaign, creating social media accounts and engaging in live-streaming and short video promotionsHowever, these efforts have failed to achieve significant results.

For startups, maintaining healthy cash flow is essentialWhile methods such as securing additional funding or "blood transfusions" from investors can temporarily solve the financial issues of new car manufacturers, the ultimate success still depends on the products themselves

Without proving that the company can consistently develop marketable, high-quality products, it becomes increasingly difficult to garner external supportThe inability to demonstrate steady growth or create a solid market presence often leads to the downfall of such companies, no matter how optimistic their leadership may appear.

Ultimately, Gevay’s sudden collapse highlights the fragility of the new energy vehicle market, particularly in China, where competition is fierce and the race to secure a significant market share is intenseWith established players like BYD and NIO dominating the scene, smaller companies are struggling to keep up, often unable to secure the financial stability required to survive.

What’s clear from Gevay's downfall is that, for all the promises of revolutionizing China’s automotive industry, the path to success in this highly competitive market requires more than just a compelling vision—it demands financial stability, strong product offerings, and, perhaps most crucially, the ability to weather the inevitable storms that come with the volatile nature of the electric vehicle industry.