Another new car-making force has run into trouble.
Late at night on April 9, a letter titled “TO THE SHAREHOLDERS” appeared on the XEV YOYO (Youyao Technology) official account.
The article, written in the tone of "all employees", revealed to shareholders that "Chairman Lu Di and Chief Financial Officer He Jianghao were suspected of falsifying sales, concealing the truth, making wrong decisions, and chaotic management in the company's operations and management."
The open letter of several thousand words revealed the difficulties and five major problems of Youyao Technology: the company's strategy was chaotic and its goals were unclear; the sales business developed well but was forced to suspend production and sales; financing was not ideal, and it was suspected of falsifying sales to support financing with loans; financial management was chaotic, and a one-size-fits-all suspension of payment led to a run on suppliers; the salaries of all employees were suspended without reason, and the Shanghai company was violently laid off.
Employees said that because the company's management did not formulate clear, market-compliant goals and plans and a clear budget system (and "had never formulated one"), the annual sales targets were set unreasonably and financial management was chaotic.
This not only resulted in the sales team being unclear about the company's actual sales targets, but the company also invested in a large number of projects that continued to lose money. By the end of 2023, the company's cash flow was close to breaking.
The "Letter to Shareholders" disclosed that Youyao Technology's total external debt exceeded 300 million yuan, but its existing assets were worth less than 100 million yuan. It was seriously insolvent and on the verge of bankruptcy.
Moreover, the management later focused only on how to cash out the existing inventory of vehicles, and all operations were forced to shut down.
Youyao Technology is also facing lawsuits from multiple suppliers, and employees in Shanghai and Hefei have also begun to defend their rights according to the law.
At the end of the letter to shareholders, the employees’ handprints and signatures were also included, indicating that they believed that shareholders had the right to know the true situation, so they wrote this article.
Although Youyao Technology is a new force in China's car manufacturing industry, it is not well-known in China. It was established in 2018 and has always focused its business development on overseas markets, mainly in Europe.
Its founder and chairman Lu Di graduated from Coventry University in the UK and worked for JAC Motors. He helped JAC Motors to set up and lead the JAC Italian Design Center, and was well-known in the automotive designer circle, especially in the Chinese automotive designer circle.
Co-founder Lu Bin has worked for SAIC-GM Chevrolet, Geely and Chery, responsible for brand channels and sales, market planning, marketing and other work. He has more than 15 years of experience and has also held important positions in WM Motor.
YOYO, the first model of YouYao Technology, is a pure electric small car that can only seat two people, with a maximum range of only 150km and a maximum speed of only 80km/h. It will be available in Europe in May 2021.
However, on April 10, the company's founder and CEO Lu Di told Automotive Business Review another perspective of the incident.
He believes that this is an illegal act in which a dismissed employee illegally controlled the company's WeChat public account to publish false information.
The story is that by mid-2023, XEV's sales in Europe had reached a certain scale, but the company's sales system was not particularly perfect, mainly using the agency system, with dealers taking on front-line sales work. The sales system of mature domestic companies is relatively complete, and Ludi wants to introduce this system to XEV Europe, build a technology and digital sales platform, and improve management efficiency.
When recruiting talents, he met the former Weimar team and eventually joined, working in Shanghai. Later, Lu Di found that the domestic sales team could not remotely control the sales in Europe. The sales targets were not met in the third and fourth quarters of 2023 and the first quarter of this year, and the gap was very large.
“The sales team was in a very negative working state in the first quarter. Director-level people showed up in the office twice a week or even less. The company contacted them many times but they didn’t respond. We couldn’t even contact them when we wanted to sit down and have a good talk. We later decided to accept this failure and disbanded the Chinese sales team,” said Lu Di.
"The laid-off employees then put up a very fierce resistance, refused to hand over any work, continued to control the official website, WeChat public account and other information release platforms, used the company's name to release false information and defamatory false articles, and sent the articles to our partners and shareholders with email addresses starting with XEV."
Lu Di said he had called the police on the evening of April 9 and the police have already started investigating. He is negotiating with Tencent over the management rights of the WeChat public account.
Lu Di stressed that the company did not commit fraud. Instead, it was the former WM Motor employees’ sales team that had poor professionalism and used company resources for personal gain. “The sales team took advantage of their positions and privately used our company’s channel resources to sell other brands and exported products of other domestic auto companies to some agents and regional dealers in our channels. We have solid evidence.”
Lu Di pointed out that the team not only used XEV's channels to work for other companies, but also had other suspected violations. "When building the DMS online sales system, they found a supplier privately and did the work without a budget, without going through the process, and without signing a contract. After the work was done, they came back to sign the contract and go through the process. We have reason to suspect that there was a transaction involved."
In September 2023, at the IAA Auto Show in Munich, XEV exhibited their micro electric car YOYO PRO. The booth was right next to the Leapmotor booth. At that time, Ludi was in high spirits and ready to make a big move. But six months later, the company is completely different. Ludi said that sales were the worst in the fourth quarter of last year and the first quarter of this year, and it sold less than 4,000 vehicles last year. The company originally had a scale of 180 people, with R&D in Hefei, a production base in Xuzhou, administration and sales front and back offices in Shanghai, and design, pre-sales and after-sales in Italy.
Lu Bin, former co-founder and senior vice president of WM Motor, also appeared at the XEV booth at the IAA Auto Show. There were also media reports that Lu Bin served as the supervisor of Shanghai Yaoyou Automobile Sales Co., Ltd. and the co-founder of XEV Group. When a reporter from "Auto Business Review" asked Lu Di to confirm whether the "former WM Motor employee" was Lu Bin, Lu Di did not respond.
