Why do automotive companies go bankrupt more easily?

Electric cars: Byton's German subsidiary is insolvent

The Chinese automaker Byton is letting its German subsidiary go bankrupt. According to an announcement, the Munich District Court has initiated insolvency proceedings for Byton GmbH. According to a report by Wirtschaftswoche, the bankruptcy petition came from one of the company's creditors.

The future of the Chinese parent company is also uncertain. Byton started in 2018 with great ambitions and promises to bring a competitive electric SUV for around 45,000 euros on the market. The company attracted a lot of attention with its appearances at the CES electronics fair, but a finished car has not yet rolled off the assembly line.

Production did not start

The company, co-founded by two former BMW managers, is in financial difficulties. At the IAA 2019, Byton had presented a model ready for series production, but the announced start of production did not materialize. Byton actually wanted to start production in its own factory in China last year. Instead, the manufacturer had completely stopped operations due to financial bottlenecks.

Officially, the company blamed orders that were canceled due to the Corona crisis for the problems. On the other hand, Wirtschaftswoche quotes an insider that the failure to make payments from business partners is the reason. Because several hundred million US dollars were missing, suppliers and employees could no longer have been paid. In the meantime, all German and American employees have probably been laid off.

Dismiss employees

Byton had always emphasized the international character of the company with a design center in Germany and software development in Silicon Valley. The German employees in the Munich branch and their US colleagues apparently received no salary for months. In the USA, the company also laid off a large number of its employees in April 2020.

The two BMW managers who co-founded the company are no longer on board either. CEO Carsten Breitfeld moved to the board of directors at the beginning of 2019 and finally went to competitor Faraday Future. His successor in the executive chair, Daniel Kirchert, left Byton a year later and recently hired the Chinese manufacturer Evergrande Auto.

It remains to be seen whether Foxconn's involvement will create stable prospects for Byton. At the beginning of January, the contract manufacturer got involved as a partner and announced a start of production in the first quarter of 2022. Byton initially did not respond to a request on Friday as to whether the schedule is still there and what the plans are for the European market.

(vbr)

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