Written by Lu Qianying

Edited by Chen Feng

In 2024, HiPhi Automotive is on the brink of survival.

On the first day back to work after the Spring Festival this year, news spread that HiPhi Automotive had suspended production for six months. Soon afterward, HiPhi issued a statement announcing that, starting from February 19th, significant adjustments had been made to the company's daily operations, and various relief measures were being vigorously implemented.

During this period, HiPhi charging stations, charging pile installations, and the charging function on the App (including free charging services) will temporarily cease operations. The distribution of App HiPhi points and the mall will also temporarily stop operating.

This high-end new energy vehicle company, once held in high hopes, now faces multiple crises including production suspensions, capital shortages, and supply chain disruptions. The company's founder, Ding Lei, has also been rumored to have absconded with funds.

However, earlier this month, Ding Lei appeared in a livestream for the first time in a while, publicly refuting rumors of his absconding and stating that he is still at the company. He emphasized that the company is fully entering the pre-reorganization phase and is not bankrupt.

In fact, during the time when Ding Lei seemed to have "disappeared," he was far from idle. Instead, he was still striving to find a way out for HiPhi.

Image source: HiPhi Automotive's official Weibo account

Earlier this year, rumors circulated in the market that Changan Automobile intended to acquire HiPhi, but ultimately no substantial progress was made. Then, in May of this year, HiPhi signed a $1 billion Comprehensive Strategic Cooperation Agreement with iAuto Group. However, there has been no new news on when this funding will actually arrive.

Earlier still, in 2023, a $5.6 billion investment intention signed with the Saudi Arabian Ministry of Investment was originally seen as a lifeline for HiPhi, but this funding also failed to materialize.

Despite repeated unsuccessful fundraisings, Ding Lei and his team continue to seek other potential investors, including attempting to obtain short-term funding through "corporate bonds for the public interest" to maintain the company's basic operations.

Meanwhile, HiPhi employees are also trying to secure more survival opportunities for the company through live streaming and other means.

However, Ding Lei and his team's various attempts have had little success. It was not until July 1st of this year that HiPhi applied to the court for pre-reorganization and was accepted by the court on August 8th.

Today, HiPhi's fate hangs in the balance. The persistence of Ding Lei and his team, whether there will be capital injections, and how to restore after-sales services have become key factors in this reorganization game.

For HiPhi, every step forward is crucial to its survival.

1. Ding Lei has not absconded, leading employees as the last guardian

Since HiPhi suspended production in February 2024, the number of employees has drastically decreased, especially in the sales team, which was almost entirely disbanded.

According to a March report by Yinshi Finance, a HiPhi after-sales employee introduced that the company currently retains only a handful of after-sales personnel, maintaining basic after-sales services in only nine cities nationwide. The entire company has approximately 100 employees remaining.

Furthermore, according to public disclosures by Yang Yueqing, the Director of Engineering Projects, these remaining employees, including senior executives, receive a monthly salary of only 2,690 yuan, which is the minimum wage standard in Shanghai.

During the months of production suspension, the company attempted various self-rescue plans. On March 8th, HiPhi officially began live streaming sales, with Yang Yueqing personally participating, raising funds for the after-sales department by selling items such as steaks.

Image source: HiPhi Automotive's official Douyin account

However, these attempts did not yield significant improvements, ultimately leading the company to embark on the path of pre-reorganization. On July 1st, HiPhi applied to the court for pre-reorganization and was accepted by the court on August 8th. Then, on September 11th, the company issued a notice recruiting strategic investors, requiring participating investors to pay a significant deposit to ensure sufficient financial resources and investment intentions.

Moreover, in the months following the production suspension, Ding Lei remained out of the public eye, fueling rumors that he had absconded. The company failed to promptly respond to these rumors, causing speculation to escalate.

It was not until September 13th that Ding Lei finally appeared in a livestream, publicly responding to rumors for the first time. Ding Lei clearly stated that he was still at the company and that the company was actively engaged in pre-reorganization, with no intention of bankruptcy or absconding. Ding Lei revealed that the company had signed contracts with some parts suppliers and was in discussions with more partners.

In fact, Ding Lei's appearance at this time was, to some extent, also sending a signal to the outside world:

He had not abandoned the idea of absconding with HiPhi but instead intended to lead the remaining employees as "guardians," continuing to lead HiPhi through the self-rescue phase of pre-reorganization.

For Ding Lei, who has been in the automotive industry for over 35 years, this is by no means easy. On the one hand, there is the acknowledgement of HiPhi's failures, and on the other, there is the challenge of finding a new path forward for HiPhi.

Earlier in his career, Ding Lei served as a senior executive at SAIC-GM. As a manager in a multinational company's China operations, Ding Lei not only had many years of experience in manufacturing but was also familiar with upstream and downstream supply chain management. In traditional automakers, he witnessed the rise of China's automotive industry, and these experiences provided valuable insights for his later entrepreneurship.

Ding Lei's true transformation came after he joined LeTV's automotive division in 2015.

In LeTV's smart electric vehicle project, Ding Lei began to engage with electric vehicle research and development under the guidance of intelligent and internet-based thinking. Although LeTV collapsed due to capital chain issues, this experience opened up new horizons for Ding Lei.

He saw the future of the electric vehicle market and, in 2017, founded Human Horizons, launching the high-end electric vehicle brand HiPhi (HiPhi), officially entering the new energy vehicle market. He sought to combine his experiences in traditional automakers and LeTV's automotive division to create a premium product that integrates intelligence, luxury, and technological sense.

Image source: HiPhi Automotive's official Weibo account

However, despite HiPhi's significant investment in technology, introducing cutting-edge features such as autonomous driving and intelligent connectivity, market response has been less than expected. Its high pricing has limited its consumer base, with annual sales averaging less than 5,000 vehicles over the past three years.

Simultaneously, the continuous investment in substantial R&D and production costs has strained HiPhi's capital chain, ultimately leading to the path of pre-reorganization.

2. HiPhi is still waiting for lifesaving money

HiPhi Automotive's fundraising journey has been long and tortuous.

The latest news on its fundraising dynamics remains from May. According to foreign media reports, HiPhi Automotive signed a Comprehensive Strategic Cooperation Agreement with iAuto Group Inc. for a $1 billion investment, seen as a crucial step in HiPhi's resumption of production.

Under the agreement, the two parties will collaborate in areas such as production coordination, equity mergers and acquisitions, and technological cooperation. iAuto has committed to providing the first round of funding for HiPhi Automotive's reorganization, aiming to complete the transaction before the release of the 2024 first-half financial report.

However, according to the Times Weekly, insiders at HiPhi Automotive remain cautious, stating that "only when the funds are actually received can they be considered reliable" and revealing that other investors are planning to join in the future. Therefore, while this funding is a crucial step for HiPhi Automotive's resumption of production, its actual implementation remains to be seen.

This attitude reflects HiPhi's caution after multiple unsuccessful fundraising intentions.

On the brink of bankruptcy, HiPhi chose to seek a new path through "pre-reorganization" rather than Directly enter bankruptcy liquidation .

Image source: HiPhi Automotive's official Weibo account

To some extent, pre-reorganization not only buys valuable time for HiPhi but also builds a channel for introducing strategic investors.

For HiPhi, this means that the company can continue to engage in capital operations and business adjustments without fully entering bankruptcy proceedings.

In other words, entering the pre-reorganization phase essentially buys HiPhi time to negotiate with potential investors, avoiding the risk of rapid liquidation of assets. Additionally, pre-reorganization signals to the market that the company still has recovery potential.

Simultaneously, HiPhi is openly recruiting strategic investors. On September 11th, Human Horizons issued a recruitment notice for strategic investors. The notice requires investors to pay a deposit of 5 million yuan during the due diligence phase and a performance bond of 50 million yuan before signing the investment agreement.

The notice also states that any institution with strategic investment intentions towards Human Horizons' Jiangsu and Shanghai companies and meeting the above conditions may apply from the date of issuance until 18:00 on October 10th, 2024.

The stringent requirements imposed by HiPhi stem from its tumultuous fundraising history. In the past, Ding Lei and his team encountered multiple potential investors in their search for funds, but most ultimately failed to materialize. This further exacerbated the company's capital difficulties.

In June 2023, HiPhi Automotive announced a cooperation agreement with the Saudi Arabian Ministry of Investment worth up to $5.6 billion, planning to establish a joint venture for electric vehicle R&D and production. Although the Saudi partnership was once seen as HiPhi's "lifesaver," the agreement remained at the intention stage and failed to provide actual financial support to the company.

HiPhi's operational difficulties may be another crucial factor behind the failure of the Saudi investment to materialize.

Image source: HiPhi Automotive's official website

Although HiPhi is positioned in the luxury market, its sales have remained stagnant. The Saudi side may have realized that while HiPhi's luxury positioning and technological advantages are attractive, they are not sufficient to enable it to establish a strong foothold in the global market.

Meanwhile, Saudi Arabia has been actively promoting the development of the electric vehicle industry to reduce its dependence on the oil economy. In previous similar investments, Saudi Arabia has invested $1 billion in Lucid Motors in the United States and signed a cooperation agreement with China's NIO. However, due to NIO's suspension of production in China, Saudi Arabia's investment in NIO was also suspended, which may have made Saudi Arabia cautious in investing in new energy vehicles.

Earlier in 2024, rumors circulated that HiPhi was in talks with Changan Automobile for acquisition. Changan Automobile was once considered a potential strategic investor that could take over HiPhi. Later, rumors emerged that multiple automakers, such as Avita, FAW Group, and Lifan, would acquire HiPhi Automotive. However, none of these rumors materialized.

Fast forward to May of this year, media reports emerged that iAuto had signed a strategic cooperation agreement with Human Horizons, HiPhi's parent company, planning to inject $1 billion to help HiPhi resume production. However, according to the Times Weekly, insiders at HiPhi Automotive remained cautious, stating that "only when the funds are actually received can they be considered reliable."

Multiple unsuccessful fundraising intentions have left HiPhi still facing a significant capital gap. Ding Lei and the HiPhi team have had to turn to other fundraising methods, including recruiting "corporate bond investors for the public interest."

This approach allows investors to provide loans to HiPhi during its bankruptcy proceedings to maintain production and operations, with priority repayment upon completion of the project through cash realizations. Although this fundraising method is risky, it provides HiPhi with valuable survival opportunities.

After rounds of unsuccessful fundraising intentions, HiPhi's future remains uncertain.

Whether the funds will actually arrive and whether strategic investors will take over will determine HiPhi's fate in the coming months.

3. HiPhi owners are still waiting

In a recent livestream, Ding Lei stated, "HiPhi owners are HiPhi's most valuable asset. As long as owners remain, HiPhi will endure. The entire HiPhi company is undergoing a rebirth, and the HiPhi team is undergoing a transformative change."

According to official HiPhi data, sales in 2021 and 2022 were 4,237 and 4,349 vehicles, respectively, and 4,829 vehicles in 2023. Roughly estimating, the total number of HiPhi owners is less than 20,000.

Currently, HiPhi owners are experiencing mixed emotions. They closely follow HiPhi's latest developments, with many owners supporting the brand but also some concerned about after-sales issues.

Many owners express unwavering support for HiPhi, praising its unique design and domestic luxury positioning. For instance, in the Autohome forum, one owner stated, "Although HiPhi is facing difficulties, I still support them. I don't regret buying this car. Domestic brands can produce such unique and individualized products, which deserve support!" Such voices are not uncommon among HiPhi owners, with many holding high praise for the product quality and uniqueness of HiPhi vehicles.

Image source: HiPhi Automotive's official website

Of course, many owners are also concerned about after-sales issues. On various social platforms and the official HiPhi App, owners have reported that their vehicles have been unable to be repaired for extended periods at service centers, particularly due to a lack of parts, causing repair progress to stagnate.

One owner mentioned, "After I bought it, I had an accident last month, but the repair shop hasn't fixed it yet. Parts are out of stock, and after-sales has not responded." This situation has frustrated many owners, particularly after HiPhi announced production suspensions, making the continuity of after-sales service a significant concern.

Nevertheless, some owners believe that there is no need to be overly concerned about after-sales issues, claiming that their vehicles can still receive basic maintenance. On a social platform, one owner shared, "I just had a maintenance check and replaced the glass a few days ago. After-sales service is still operating normally. Although there is a shortage of parts, routine maintenance is generally not a problem."

As the first Chinese luxury automotive brand positioned in the 600,000 to 800,000 yuan price range, HiPhi owners generally have a high sense of identity with the product. In other words, for HiPhi owners, purchasing this car is not just a choice but also a vote of confidence.

However, owners' patience is limited, and they are waiting for the company to present effective solutions.

Image source: HiPhi Automotive's App

Regarding after-sales service, HiPhi issued an announcement in early August 2024, announcing that it had authorized Shanghai Yueda Zhixing Automobile Service Co., Ltd. to procure HiPhi automotive parts and restore after-sales service response. This initiative has gradually resumed operations in multiple cities nationwide, with some regular parts supplies beginning to recover, and after-sales service centers expanding their service coverage.

However, despite the official commitment, many owners have recently complained about severe shortages of parts and excessively long repair wait times, causing significant inconvenience in vehicle usage.

In the coming months, whether HIPHI X can solve these core problems will directly affect the confidence and loyalty of car owners.

The future of HIPHI X remains uncertain. Although there are strong voices of support among car owners, their patience is limited after all.

At this juncture, the fate of HIPHI X depends not only on the arrival of strategic investors, but also on whether it can fulfill its promises to car owners. The stability of after-sales service and the recovery of parts supply have become the core elements for HIPHI X to rebuild market trust.

If HIPHI X can grasp these key points in the next reorganization, it may be able to rise from the ashes.

However, at present, the company is facing financial difficulties, after-sales service problems, and the efforts of Ding Lei's team, which are intertwined into a game of life and death for HIPHI X.

(The cover image of this article is from HIPHI X's official Weibo account.)