What’s going on here?
Ji Yue Auto, a collaboration between Baidu and Geely, is racing to secure new funding and overhaul its operations amid challenges in China’s competitive EV market.
What does this mean?
The joint venture of tech leader Baidu and auto giant Geely is grappling with financial troubles just two years after launching. Recent tensions escalated when Ji Yue’s CEO faced public questioning from employees over unpaid salaries. While official statements have sidestepped these pay issues, they confirmed plans to merge overlapping departments. Meanwhile, sales teams in key Chinese cities are reportedly unpaid and seeking new positions. With Geely owning 65% and Baidu 35% of Ji Yue, and neither company commenting on the discord, the brand is feeling the heat. According to market analyst John Zeng, these woes highlight the broader battles small EV brands face against established competitors as consumers prefer more dependable options.
Why should I care?
For markets: Shifting currents in the EV race.
China’s EV market is fiercely competitive, pushing smaller brands like Ji Yue to the sidelines as giants dominate. This turbulence in Ji Yue reflects a broader trend where consumers are likely to consolidate towards leading EV manufacturers. Investors will be watching closely for any signs of a shake-up, as smaller brands struggle to maintain viability.
The bigger picture: Strategic plays in a cutthroat market.
Ji Yue’s predicament underscores the strategic challenges and financial resilience required in the fast-evolving EV landscape. With major players like Geely and Baidu backing the venture, the response to these financial strains will be pivotal. The industry’s direction could be influenced by how these movements affect market structure and competition, potentially prompting similar joint ventures to reassess their strategic positions.
