Lixiang, one of the many Chinese electric vehicles (EV) startups, has recently driven itself into a series of missteps, from the overdue delivery of the new model, auto loans partner bank terminating tie-up, to complaints from unhappy customers over its latest vehicle Lixiang One’s quality.
Earlier this month, according to multiple local media coverage, China’s Citic Bank, the country’s seventh-largest lender by total assets, suspended its auto financing program with the carmaker, resulting in the model’s customers having to look at other financing options. The startup later on had to swap the deal for either its own or other bank loan programs. In addition to Citic, Lixiang also offers auto loans to potential buyers with three other local banks, including China Merchants Bank, Jiangnan Rural Commercial Bank, and Bank of Communications.
The root cause of Citic’s suspension of its partnership with Lixiang is deep buried in the latter’s unsuccessful acquisition of Chongqing-based Lifan Automobile last December. Lifan’s total sales have plunged 73.5% for the first ten months this year from the same period in 2018, according to local tech media 36Kr. Lifan Automobile has also been listed as a defaulter with over RMB 368.5 million in debt, which in turn could possibly render its parent Lixiang a defaulter in the eyes of the banks.
For customers who managed to purchase a Lixiang One, it’s also not an easy ride, as technological flaws have been spotted on the newly-delivered model. A car owner said on Monday that the vehicle refused to speed up on the highway after he hit the gas pedal. Another owner reported a battery pack breakdown.
The automaker responded to the first incident in a Weibo post. While it stated that the vehicle does not have any quality issue, it explained that the vehicle’s transport mode, which caps the car at 30 kilometers per hour, was not turned off during the pre-delivery inspection. As for the battery pack problem, Lixiang’s vice president of sales Liu Jie admitted that the wiring plug-ins installed inside the battery were the cause.
Founded in 2015, Lixiang has raised seven rounds of funding. The EV maker has closed its USD 530 million Series C fundraising round in August, with Meituan’s CEO Wang Xing personally contributing nearly USD 300 million and ByteDance pouring in USD 30 million.
It’s first production model, dubbed Lixiang One, was unveiled in April and scheduled for delivery in November. The model is priced at RMB 328,000 (USD 46,827), which is about the same as the cheapest version of Tesla’s China-made vehicles. The delivery time of Lixiang One was delayed to December, according to the EV maker’s announcement in October.
Lixiang is building a variable interest entity (VIE) structure for the purpose of going public in an overseas stock market, according to documents submitted by the Chinese pump producer LEO Group to the Shenzhen Stock Exchange in June.
36Kr is KrASIA’s parent company.