Details of the financial crisis facing the Chinese electric vehicle company
Neta Auto, one of China’s electric vehicle startups, has experienced dramatic developments in recent months amid rumors of a potential acquisition by the Japanese automotive giant Toyota. However, both companies have officially denied these reports. Meanwhile, recent court filings indicate that Neta Auto may face bankruptcy proceedings instead of a merger or acquisition, as mounting financial troubles threaten the company’s future.
Official Denial of Acquisition Rumors
At the beginning of 2025, speculation intensified about Toyota possibly acquiring Neta Auto, especially following reports from some Chinese and international media outlets. However, Toyota China quickly dismissed these rumors. Xiao Yiming, head of communications at Toyota Motor (China), stated, “We have not heard about this matter before and ask for help in clarifying this rumor.” Similarly, Neta Auto itself confirmed that the news was false, putting an end to the speculation that had worried investors and customers alike.
Worsening Financial Crisis and Restructuring Efforts
Despite denying any acquisition, Neta Auto has been unable to overcome its deepening financial crisis that began in late 2024. In March 2025, the company faced increasing pressure from suppliers demanding urgent solutions to settle accumulated debts. A critical meeting was held at Neta’s Shanghai headquarters, where a debt restructuring plan was agreed upon. On March 25, Neta announced agreements to convert debts into equity with 134 of its key suppliers, totaling over 2 billion yuan (approximately 285 million USD). These agreements included major suppliers such as CATL, a leading electric vehicle battery manufacturer, and Gotion High-Tech, among others in the supply chain.
Efforts to Secure New Funding
In an attempt to navigate the crisis, Neta held a shareholders’ meeting in January 2025 to discuss a Series E funding round aimed at raising between 4 and 4.5 billion yuan (570 to 640 million USD). The lead investor was expected to contribute about 3 billion yuan (430 million USD). According to the company’s roadmap, these funds were scheduled to arrive in April 2025 to restore production and finance future development. However, insiders confirmed that as of mid-May, the funds had not materialized, further complicating the company’s financial situation.
Legal Proceedings Point to Possible Bankruptcy
In a new development, court records dated May 13, 2025, reveal that Neta Auto’s parent company, Hozon New Energy Automobile Co., Ltd., is now under judicial review for bankruptcy. Shanghai Yuxing Advertising Co., Ltd. filed the case with the Intermediate People’s Court of Jiaxing City in Zhejiang Province, initiating bankruptcy procedures against the company. Under Chinese bankruptcy law, the process typically begins with either a pre-reorganization application or a formal bankruptcy filing. After a creditor files for liquidation, the court must notify the debtor company within five days. The company then has seven days to object or submit a restructuring plan. If reorganization is accepted, the company or appointed administrator must submit a draft plan to the court and creditors within six months to begin financial recovery efforts.
Impact on China’s Electric Vehicle Industry
Neta Auto’s crisis reflects broader challenges facing many emerging electric vehicle manufacturers in China, which struggle with fierce competition, rising production costs, and difficulties securing the necessary financing for growth and innovation. Although Neta experienced rapid growth in recent years, it now faces a critical test of its resilience in a volatile market. This crisis may trigger widespread restructuring in China’s EV sector, potentially leading to market exits or mergers with larger players.
With Toyota denying any acquisition plans, Neta Auto’s future remains uncertain as it grapples with restructuring attempts and the looming threat of bankruptcy. These developments highlight the harsh realities of China’s electric vehicle market, where intense competition and financial pressures demand innovative solutions and careful management to survive. Investors and industry watchers are closely monitoring Neta and its parent company’s next moves, which could determine their fate in one of the world’s most competitive automotive markets.
Tamara is an editor who has been working in the automotive field for over 3 years. She is also an automotive journalist and presenter; she shoots car reviews and tips on her social media platforms. She has a translation degree, and she also works as a freelance translator, copywriter, voiceover artist, and video editor. She’s taken automotive OBD Scanner and car diagnosis courses, and she’s also worked as an automotive sales woman for a year, in addition to completing an internship with Skoda Lebanon for 2 months. She also has been in the marketing field for over 2 years, and she also create social media content for small businesses.
