WM Revival, Zotye Consecutive Limit-Ups, Both Driven by the Same Purpose

Even though the price war in the automotive industry has reached a life-and-death stage and profit margins have dropped to as low as 3.5%, both insiders and outsiders in the car manufacturing sector continue to tirelessly push forward on this path.

There is ZOOM, a company entering the car manufacturing industry against the trend; Jiyue, which continues to maintain its presence on social media platforms; and Neta, which keeps seeking investments everywhere even when its car systems are offline. The actions of each are truly puzzling.

However, what has puzzled the outside world the most might be the recent actions of Weima and Zotye. As representatives of traditional automotive manufacturers and new forces in car manufacturing that are "stubbornly hanging on," their recent moves have left people exclaiming—it's hard to understand.

Last week, WM Motor, which is undergoing bankruptcy restructuring and entangled in negative public opinion, suddenly released a "White Paper for Suppliers," officially announcing a plan for a 1 billion RMB injection to resume production in September. It also outlined an "ambitious blueprint" to challenge a production target of 1 million units and a revenue of 120 billion RMB by 2030, which is nothing short of jaw-dropping.

Zotye Auto, which has been stalled for 5 years with a cumulative loss of over 20 billion yuan, has no 4S stores in the country, and its production lines have been auctioned off by the court, making a resumption of production hopeless. However, in the past month or so, its A-shares have experienced multiple limit-ups, with its market value and stock price nearly doubling.

At first glance unrelated, the two matters, in the author's view, actually share the same underlying survival logic: the stagnant yet enduring car manufacturers in the automotive industry have long abandoned "car manufacturing" and instead have started playing the game of "monetizing qualifications and cashing out capital."

The underlying theme of this game is the harsh reality of fierce competition in the automotive industry—once an automaker enters the ICU, very few can truly recover; what is referred to as "resurrection" is merely the last struggle of those trapped, leveraging scarce qualifications and local demand.

Although many investors of all sizes now hold large amounts of cash and cannot find suitable outlets, which directly led to a 10.77 trillion yuan increase in household deposits in the first half of this year, the question is, would anyone be foolish enough to take on those projects that are basically unlikely to improve?

01Once an automaker enters the ICU, it never comes out.

In most people's eyes, WM Motor's "resurrection declaration" is full of familiar capital rhetoric.

On September 6, Shenzhen Xiangfei Automobile, which took over WM Motor, announced an investment of 1 billion yuan for the resumption of production, with plans to roll out the first batch of vehicles within the year and an ambitious goal of achieving an annual production capacity of one million units by 2030.

Turning the pages of this "white paper," the more glaring figures are the total debt of 14.8 billion yuan and the deferred claims of 11.2 billion yuan. The injection of 1 billion yuan can only cover a fraction of the debt settlement, while Xiangfei Company's paid-in capital is only 42 million yuan. Many industry insiders believe that this revival seems more like a pre-planned capital script.

Whether it was last week's announcement of reorganization and revival, or the recent placement of two WM Motor vehicles in Baoneng's showroom, the shadow of the "Baoneng system" cannot be ignored. In fact, many enterprises under the name of Huang Jing, the actual controller of Xiangfei, are deeply tied to the Baoneng system, including Kunshan Baoneng Auto and Qoros Automotive Sales Company.

The capital player who once dragged Qoros Automotive into the mire is now attempting to reenact the "capital maneuvering technique" using WM Motor's shell resources, and the 1 billion yuan investment seems more like a promise to potential buyers and local governments. After all, to achieve a production capacity of one million, the future investment required will exceed ten billion yuan.

Zotye’s stock price frenzy appears even more absurd. Despite consecutive daily limit-ups, the company’s semi-annual report clearly admits that “vehicle manufacturing operations have not resumed due to a lack of operating funds.” The so-called revenue growth relies on component and door businesses, which have nothing to do with car manufacturing. There is no information suggesting that Zotye Auto’s outlook is developing in a positive direction. However, upon seeing the news that “major shareholder Jiangsu Shenshang will auction off its 130 million shares,” it becomes clear why market manipulators would go to great lengths to drive up Zotye’s stock price.

A closer analysis reveals that all these "revived individuals" share three major flaws.

1. Both companies have been evasive in handling their debts. WM Motor diluted significant claims using a "cash + trust" method, while Zotye transferred shareholder responsibilities through judicial auctions, yet both avoided substantial compensation to employees, creditors, and car owners. 2. Their capacity planning is detached from reality. WM Motor's goal of one million units over five years equates to selling 200,000 cars annually, while at its peak in 2020, it sold only 22,000 units for the entire year. 3. There is a severe lack of technological reserves. Zotye's so-called "L4 intelligent driving technology" lacks evidence, and WM Motor's resumed production models are still the old EX5 from years ago, which holds no competitive edge in today's market, not even as ride-hailing vehicles.

What is even more alarming is the deviation from the essence of the automotive industry. Currently, the shortest cycle for car manufacturers from research and development to mass production is at least two years, yet these “revivalists” are attempting to resume production in three months and achieve a production capacity of one million vehicles within five years—this is almost a fantasy.

From the perspective of market competition, the automotive sector is no longer a "blue ocean" with room for trial and error.

In the current market landscape, the leading companies have already established their scale advantages. Among domestic carmakers such as BYD, Geely, Changan, and Chery, each is determined to achieve annual sales of three million vehicles. Tesla, Huawei, and Xiaomi, with their strong brand appeal and fan bases, firmly occupy the mid-to-high-end market. Even the once-thriving “NIO, XPeng, and Li Auto” now have no choice but to survive by lowering prices. There is basically no room left for "comeback players."

Especially the trust crisis brought about after bankruptcy makes it virtually impossible for an automaker to regain the trust of consumers and suppliers. The iron law of the automotive industry has long been established: once a car company halts operations due to debt or trust issues and is pushed into the "ICU," it is almost impossible for it to recover on its own.

The “revival dramas” of WM Motor and Zotye are not isolated cases in the new energy vehicle industry. In July this year, HiPhi’s $600 million investment agreement with Middle Eastern capital ultimately fell through—the investor even refused to pay the deposit on the grounds that the “document format did not comply,” causing the company’s revival plans to stall once again.

These cases all point to one truth: a revival without practical efforts is essentially a game of passing the parcel with capital. It involves creating concepts to inflate stock prices, then pledging shares for financing and cashing out. Ultimately, those left holding the bag are either trapped investors or employees, suppliers, and car owners with no recourse for their grievances.

02The "Monetization" Conspiracy of the Trapped.

Anyone who knows a bit about the market understands that the revival of bankrupt car companies is likely a trap. So why do people still tirelessly "perform" this act? This suggests that, in the eyes of the main players behind the revival, even "poor-quality car companies" like WM Motor and Zotye still have many valuable aspects.

Yes, one seemingly absurd "resurrection drama" after another keeps emerging, but at the core it's never really about making cars. It's either that coveted "new energy vehicle production license" or the increasingly rare "shell" in the capital market.

Taking WM Motor as an example, when Shenzhen Xiangfei acquired WM Motor, the most crucial asset was not the factory equipment, but the scarce "new energy vehicle production license." According to industry practice, the transfer price for this type of license is no less than 1 billion yuan. This means that Xiangfei's 1 billion yuan investment is essentially "securing a high-value license at a low cost." Subsequently, they can quickly recoup their investment through license hosting, cooperative production, and other means.

Zotye's stock price frenzy resembles blatant "speculation on qualifications." The company's half-year report clearly shows no progress in the vehicle business, yet the two vehicle production licenses it holds, "Zhejiang Zotye" and "Jiangnan Automobile," have been repeatedly emphasized as having "high valuation" in brokerage research reports.

What is even more intriguing is that the timing of its stock price surge coincides precisely with the public announcement of the local government's "New Energy Industrial Park" plan. Capital is more aware than anyone that as long as the qualifications remain, it can become a "stepping stone" for local government investment promotion, and the stock price is the lever to leverage policy resources.

More importantly, after local state-owned assets took control of Zhongtai's qualifications and shell with a "1 yuan consideration," they raised the stock price to reduce their holdings and cash out, resulting in a net reduction of 230 million yuan by shareholders within six months, leaving retail investors to take over.

A industry investor bluntly stated: "Buying qualifications and shells is more reliable than making cars now. Once the qualifications can be used for OEM, you can just sit back and collect management fees. If you can't make good cars, you might even incur losses."

For local governments, having qualifications means the prerequisite for the "landing of the new energy vehicle industry," the unlimited potential for industrial growth, and even a blueprint and chapter for political achievements. As for whether enterprises can actually produce vehicles or whether market competition will allow them to survive smoothly, these are matters for later, since this process is far longer than a single term of office.

What's more noteworthy is that after the decline of the real estate industry, the automotive industry is likely to become the strategic pillar of the local economy. Where will a large amount of investment and capital go? Apart from the automotive industry with both new energy and intelligent dual tracks, there's no more attractive place than this.

Considering that the development of the automotive industry in China will have new nodes and cycles, the country has now relaxed merger and acquisition regulations, allowing high-quality assets to be injected into listed companies. Additionally, funds in the secondary market are looking for outlets. If we can find listed companies with automotive industry layouts, injecting assets into these companies through private placements can not only solve funding issues but also leverage the listed companies' platforms to integrate resources and explore potential opportunities.

In reality, the resumption of production by WM Motor and the consecutive stock price rises of Zotye reflect the absurdity of the new energy vehicle industry: a piece of qualification paper is more important than the healthy development of enterprises, capital cashing out is more urgent than the interests of employees, suppliers, and car owners, and local political achievements take precedence over the foundation of the industry. In this game, trapped capital wants to rely on qualifications to cash out and exit, local governments want to use qualifications to embellish political achievements, and car companies are merely props between the two.

This farce is depleting the credibility of China’s new energy industry. When capital treats “qualifications” like stocks to be speculated on, and local governments regard “resuming production” as a political achievement, the victims are not only the employees and suppliers who can’t get paid, and the car owners with nowhere to defend their rights, but also the healthy ecosystem of the entire industry.

However, there will come a day when this farce will come to an end. When capital cashes out and local government subsidies run out, what will be left for the market is a pile of idle factories, car owners with no avenues for rights protection, and the overdrawn "credit of the new energy vehicle industry." Only then will people understand that what truly drives industry progress and strengthens China's automotive sector is not the scarcity of qualifications, but the thirst for technology, the satisfaction of users, and the reverence for car manufacturing.