Chinese EV Maker Neta on Brink of Collapse as $600 million Funding Round Falls Through

Neta Auto, a Chinese electric vehicle (EV) startup, is facing serious financial difficulties that have halted production and caused layoffs. These issues arise amid a funding crisis and increasing debt, which has left the parent company, Hozon New Energy Automobile Co. Ltd., searching for financial stability. [para. 1][para. 2] In February, a planned Series E funding round fell through, which was expected to inject 4 billion to 4.5 billion yuan ($550 million to $620 million) into the company. A major 3 billion yuan investment was contingent on several conditions, such as production resumption and debt reduction, none of which were fully met. [para. 3][para. 4]

Founded in 2014 by Fang Yunzhou, Hozon underwent a rebranding in 2019 to operate under the Neta Auto name. The main manufacturing plant in Tongxiang, Zhejiang province, faced layoffs and production halts due to a critical shortage of components and was unable to sustain operations beyond a brief reopening in January 2024. [para. 4] Currently, Neta operates three plants in China, with the Tongxiang factory being the primary hub. [para. 5]

The company's shareholder structure is complex and significantly involves state-backed investors. Neta’s parent company’s major state-backed shareholders include several governmental investment arms such as the largest public-sector shareholder, Yichun’s government investment vehicles, occupying substantial stakes alongside others like Nanning Minsheng New Energy Industry Investment Partnership and Beijing Huading New Power Equity Investment Fund. [para. 5][para. 6] In total, state-backed entities hold nearly half of Hozon’s shares, comprising a diverse and multifaceted shareholder base. [para. 7]

In light of recent evaluation hiccups, Hozon’s pre-money valuation plummeted from a prior valuation of 42.3 billion yuan in January 2023 to only 6 billion yuan during the halted funding round, leading to disputes among existing shareholders. Hozon’s debt has reached 9.8 billion yuan, further complicating capital acquisition efforts. [para. 8][para. 9] During a March supplier meeting, Hozon attempted to negotiate the conversion of 70% of outstanding payments to equity to align with the restructured funding terms. A failure to secure new financing might lead to bankruptcy, wherein suppliers would likely incur significant losses. [para. 10]

Amid these domestic troubles, Neta continues pushing its overseas expansion, particularly in Thailand. Following the March 2025 Thailand Dealer Conference, Neta aimed to sell more than 10,000 vehicles in the country. The company also signed a five-year deal with Bangchan General Assembly Co. Ltd. (BGAC) to start local production of the Neta X model. [para. 11][para. 12] Thailand's EV subsidy policy has been advantageous for Neta, enabling them to qualify for up to 150,000 baht ($4,400) per vehicle. However, there are conditions tied to these benefits, requiring local production scales that if unmet could result in repayment of subsidies. [para. 13]

Neta Auto’s future is now dependent on its ability to navigate these turbulent waters by restructuring debt, securing investor trust, and fulfilling international ambitions. [para. 14]