Jiaxing, Zhejiang Province – Nezha Auto, a Chinese electric vehicle (EV) manufacturer, has been fined 33,000 yuan (approximately $4,550 USD) for violating labor protection regulations. The penalty, levied by the Tongxiang City Human Resources and Social Security Bureau, comes at a time when the company is reportedly facing significant financial challenges.
According to official records, two administrative penalties were issued to Hozon New Energy Automobile Co., Ltd., Nezha Auto’s affiliated company, on May 23rd. The document numbers are 桐人社罚决字 [2025] 第 000070 号 and 桐人社罚决字 [2025] 第 000071 号. The violations occurred on March 24th and April 9th at the company’s location at 988 Tongren Road, Tongxiang City, Jiaxing, Zhejiang Province. The specific infraction was refusal to rectify after being ordered to do so, a violation of Article 6 of the Labor Security Supervision Regulations.
This news arrives amidst reports of Nezha Auto struggling to secure new financing after a debt-to-equity swap plan reportedly fell short. Sources claim the company owes suppliers approximately 6 billion yuan. The initial plan required converting 3 billion yuan of debt into equity to attract new investment. However, only around 2 billion yuan in debt was successfully converted, leaving a significant gap.
The labor violation and reported financial difficulties present a complex picture for Nezha Auto, a company that has been actively pursuing an ambitious growth strategy.
Strategic Shifts and Expansion Plans
In December 2024, Nezha Auto announced a strategic shift, with Zhang Yong stepping down as CEO and founder Fang Yunzhou assuming the role. Fang Yunzhou outlined six key reforms, including a focus on both domestic and global expansion. The company aims to achieve a 50/50 split in sales between China and international markets within the next 2-3 years, targeting positive gross profit margins by 2025 and overall profitability by 2026.
Despite the reported financial headwinds, Nezha Auto has been actively promoting its international ambitions. In March, the company held a dealer conference in Bangkok, Thailand, signaling its commitment to the Southeast Asian market. Co-President Zhang Xiaodong stated at the conference that the company’s self-rescue measures were progressing effectively and that the debt-to-equity swap had laid a solid foundation for attracting external investment.
Denials and Reassurances
Nezha Auto has also publicly addressed rumors of internal turmoil. In March, the company issued a statement denying reports of disbanding its research and development team, stating that it was instead optimizing its organization and processes to improve efficiency and reduce costs.
Furthermore, the company highlighted the support of its suppliers. In late March, Nezha Auto announced that over 100 suppliers had jointly proposed supporting the company’s debt restructuring and resumption of production. A debt-to-equity agreement was reportedly signed after three rounds of negotiations.
Looking Ahead
The fine for labor violations adds another layer of complexity to Nezha Auto’s current situation. While the company maintains a positive outlook and emphasizes its ongoing efforts to improve its financial position and expand globally, these recent developments raise questions about its ability to achieve its ambitious goals. The coming months will be crucial for Nezha Auto as it navigates its financial challenges, addresses the labor violation, and continues to execute its strategic plan. The success of its self-rescue measures and its ability to attract further investment will be critical factors in determining its long-term viability in the increasingly competitive EV market.
References:
- IT之家. (2024, June 3). 哪吒汽车因违反劳动保障条例被罚 3.3 万元. Retrieved from [Insert Original Article Link Here]
Views: 0