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In a surprising turn of events, WM Motor, a once-celebrated electric vehicle startup in China, has officially filed for bankruptcy in a Shanghai court.

Records released on October 9 through China’s bankruptcy information disclosure platform confirm the distressing news that WM Motor has succumbed to financial difficulties, marking the downfall of a once-promising player in the electric vehicle market. Both Reuters and Bloomberg have reported on this unfortunate development.

This dramatic twist in the company’s fortunes comes barely a month after the investment firm Apollo Future Mobility Group withdrew its intention to acquire WM Motor for a staggering $2.02 billion. Apollo attributed its decision to the volatility of the financial market and the uneven recovery of China’s economy.

WM Motor’s demise can be attributed to the fiercely competitive landscape within the world’s largest automotive market, where smaller manufacturers find it increasingly challenging to compete as larger corporations engage in price wars. BYD, for instance, now commands more than 30% of the electric vehicle market share in China.

Founded in 2015 by Freeman Shen, the former CEO of Zhejiang Geely, WM Motor was once regarded as a frontrunner among China’s burgeoning electric vehicle startups, alongside Nio, Li Auto, and Xpeng. Heavyweights such as Baidu and Tencent Holdings counted themselves among WM Motor’s investors.

Despite its initial promise, WM Motor struggled to turn a profit in an industry that demands substantial capital investment, particularly in the automotive sector. The company’s losses doubled within just three years, ballooning to 8.2 billion yuan (approximately 1.13 billion USD) in 2021.

While WM Motor managed to sell 35,000 electric SUVs in 2021, sales figures began to dwindle. According to data from the China Automotive Technology and Research Center, the numbers remained stagnant over the course of the previous year. However, in the first eight months of the current year, WM Motor only managed to sell around 1,400 units.

WM Motor had originally planned to unveil its fifth car model, the M7 EV, this year. Regrettably, those plans were shelved. Instead, the company had to resort to laying off employees, shutting down factories, and scaling back after-sales services.

Although passenger car sales in China experienced a resurgence in August, reversing a prolonged slump from May to July, the uptick was primarily attributed to manufacturers slashing prices and the government incentivizing the purchase of environmentally friendly vehicles through tax breaks. Nevertheless, concerns lingered that the Chinese economy, still grappling with the aftermath of the pandemic, might lead to reduced spending on high-value products.

Meanwhile, Vietnam has been considered a potential market for electric four-wheelers, as these vehicles offer an attractive advantage in the context of rising gas prices and environmental issues associated with gasoline-based cars. Furthermore, the government has been introducing incentives for using electric vehicles, from reducing import taxes to forgoing a substantial part of owner registration fees. According to forecasts, by 2028, there will be one million electric cars in Vietnam, and by 2040, this figure will grow to 3.5 million.