Financial setbacks force EV maker WM Motor into bankruptcy

The electric vehicle industry has evolved with significant growth since its early years dating back to 2010 when Nissan  (NSANY) - Get Free Report launched the Leaf, which was the first mass-produced electric vehicle in the world. The Leaf car was the top selling EV on the market in its first four years until Tesla Model S knocked the Leaf off the top spot by 2015.

Since then, Tesla  (TSLA) - Get Free Report has dominated the EV market, especially after delivering its last new model, the Model Y, back in March 2019. Model Y SUV has been so popular that it was the world's best-selling car in the first and second quarters of 2023 ahead of Toyota  (TM) - Get Free Report.

Related: Tesla rival Nissan has some awful news about its electric SUVs

Lordstown filed Chapter 11 after an investment fell through

But EV sales haven't been as huge for every producer in the market. Lordstown Motors on June 27 filed for Chapter 11 protection in U.S. Bankruptcy Court for the District Delaware seeking to restructure and sell its assets after failing to secure an investment from Taiwan-based smartphone assembler Foxconn. The debtor also filed a lawsuit against Foxconn for alleged fraud. 

The Lordstown, Ohio, company had suspended production of its signature Endurance truck earlier this year amid a host of supply chain disruptions.

Another EV maker has followed Lordstown's lead as financially distressed WM Motor filed for bankruptcy in a Shanghai court seeking to restructure its debt, CnEVPost reported. The Shanghai-based EV maker on Oct. 9 filed a pre-restructuring application to the Shanghai No. 3 Intermediate People's Court, according to a WM Motor statement on Weibo.

The company, established in 2015, initially had rapid growth but began having financial problems in recent years due to the Covid pandemic, a poor capital market, fluctuating raw material costs, and setbacks in access to capital, the statement said.

WM Motor files bankruptcy to restructure its debt

WM Motor said that it hopes to save itself by realigning its strategy and resolving its debt issues. The company still has commercial value and some of its creditors are willing to reorganize, the statement said. The EV maker plans to bring in strategic investors investors globally and consult with creditors, shareholders and potential investors to hopefully achieve a turnaround.

"Through the pre-restructuring process, we will thoroughly review the company's operations and business model, and optimize each division and business in order to reduce costs, improve efficiency and achieve sustainable development," the statement said. "We will closely monitor market changes and industry trends and continue to improve our products and services with the aim of re-emerging after pre-restructuring."

The company reportedly already took steps to cut costs in October 2022 by reducing regular employee wages by 30% and management salaries by 50%. 

WM Motor produces models such as E5, E6, EX6, W5 and W6 to compete against Chinese EV companies Nio  (NIO) - Get Free Report, Xpeng  (XPEV) - Get Free Report, Li Auto  (LI) - Get Free Report and BYD  (BYDDY) - Get Free Report, as well U.S. giant Tesla  (TSLA) - Get Free Report. The company reportedly sold almost 83,500 vehicles from the launch of its first model in September 2018 through Dec. 31, 2021, according to a Hong Kong IPO prospectus.

WM Motor in late 2022 planned a reverse merger with Apollo Future Mobility Group, which was listed on the Hong Kong Stock Exchange, but the deal fell through and the agreement was terminated Sept. 8, CnEVPost reported.