Assets Restructuring, Brands Fading: The End of the Extensive Growth Cycle of the New Car-making Forces

In the new energy vehicle track, the trophy for top sales volume can turn into a bankruptcy application within two years; this proves that the "trading losses for scale" model is extremely vulnerable once the capital tide recedes, and also proves that when the industry evolves from barbaric growth to the systematic competition stage, enterprises lacking core technology reserves and brand premium capability are doomed to be eliminated.

In 2021, 360, which had suffered a failure in the mobile phone business, announced that it would cooperate with Neta Auto to manufacture vehicles. Zhou Hongyi, founder and chairman of the group, personally endorsed this "marriage" and publicly stated: "Lei Jun is one year older than me, he gambles on vehicle manufacturing before retirement. If Lei Jun can do it, why can't I?"

Four years later, when he was asked again "whether he will invest in new energy vehicles", his answer was straightforward: "I have suffered a loss once, and I will not invest again."

Behind this sentence is a clear account: In 2021, 360 planned to invest 2.9 billion yuan in Neta Auto, with an initial investment of 1.9 billion yuan, once becoming the largest shareholder excluding the management team. However, only one year later, it transferred part of its equity at 0 yuan and stopped further investment, with a cumulative loss of about 1.3 billion yuan from this investment in two years.

This veteran capital player who has been navigating the internet arena for more than 20 years stayed in the new energy vehicle track for less than two years before turning around and leaving, even faster than when he withdrew from the mobile phone market. Neta Auto's own accounts are even more shocking: from 2021 to 2023, it recorded a cumulative net loss of 18.3 billion yuan, burning about 16 million yuan on average every day. Eventually, it embarked on the path of bankruptcy reorganization due to the continuous deterioration of its operating conditions.

Neta is not an isolated case, but it is sufficiently typical.

The "Death" of Neta

The first half of Neta Auto's story is a standard "counterattack" script.

In 2014, Fang Yunzhou, an industry veteran who left Chery New Energy, founded Hozon New Energy in Tongxiang, Zhejiang. This year marks the first year of China's new energy vehicle industry. Dozens of new energy vehicle companies such as NIO, XPeng, WM Motor were established one after another, and a group of new forces that build cars with internet thinking emerged as the times require.

The people-friendly affordable strategy failed to make Neta Auto stand out among a large number of new car-making forces. In July 2018, Neta NO1, the first vehicle of Hozon New Energy, rolled off the production line. Relying on the low price of 60,000 yuan, it sold 2,000 units within 2 months. However, due to its relatively low-end positioning, there were no sales channels in mainstream cities.

Unexpectedly, in the summer of the next year, the film *Ne Zha: The Devil's Birth* became a huge hit, which made Neta Auto, who followed the trend, usher in its highlight moment. Around 2021, Neta Auto not only accepted the olive branch thrown by 360, but also reached strategic cooperation with industry giants such as Huawei, Horizon Robotics, and CATL. In this year, Neta topped the annual sales champion of new car-making forces with a delivery volume of 152,100 units, surpassing the "NIO-XPeng-Li Auto" camp. At the same time, it set its sights on overseas markets.

Its gameplay is not complicated: using "larger vehicles to compete with smaller ones", positioning its 80,000-yuan small SUV against microcars such as Changan BenBen and Chery Little Ant, and quickly achieved large sales volume in the market below 100,000 yuan. This strategy is extremely effective in the short term, which boils down to the three words "cost-effectiveness".

There is a contradictory question: traditional car companies have mature car-making models and strong discourse power over supply chains and dealers. How can a brand established only a few years ago achieve overwhelming cost-effectiveness? The answer lies in the financial black hole triggered by Neta Auto's low-price strategy: from 2021 to 2023, Hozon New Energy recorded a cumulative net loss of 18.3 billion yuan, with an average loss of more than 80,000 yuan for each vehicle sold. The more it sells, the more it loses.

In fact, "losing money for popularity" was not new in the then prevailing new car-making boom. The three leading companies NIO, XPeng and Li Auto are particularly typical: their combined net loss in the first half of 2022 was about 9.594 billion yuan, which is equivalent to an average loss of 53,200 yuan for each delivered vehicle.

However, the sales crown that Neta obtained with real money was questioned for containing "moisture". Back then, some media pointed out that the gap between Neta Auto's insurance registration volume (107,440 units) from January to October and its officially announced sales volume (129,206 units) exceeded 20,000 units. According to a report by LatePost Auto, in 2022, more than 20,000 vehicles of Neta Auto were equivalent to "zero-kilometer used cars", which were sold to dealers after license registration and were not fully digested until June of the following year.

The most fatal problem of Neta Auto is not selling vehicles at a loss, but that it relied on the B-end market (online car-hailing, car rental companies, official vehicles, etc.) to get started in its early stage, and completed the transformation to the C-end by relying on the low-price strategy, creating an illusion of victory. When BYD Seagull and Wuling Bingo entered the same price range with stronger brand power, Neta had neither brand premium to defend nor technical barriers to fight back.

Worse still, not only the investors believed in this victory, but even Neta itself believed it — before building a brand moat in the low-to-medium end market, it began to attempt high-end transformation, launching Neta S and GT sports cars to impact the 200,000 to 300,000 yuan price range. As a result, it not only failed to achieve brand upgrading, but also consumed a large amount of R&D resources and missed the dividend window of the family user market.

Defeat came like a landslide. In 2024, when Hozon New Energy was sprinting for an IPO, news of production shutdowns came out one after another from its three major production bases in Tongxiang (Zhejiang), Yichun (Jiangxi) and Nanning (Guangxi). Public opinions such as supply chain disruption and unpaid employee salaries were rampant, until it entered bankruptcy reorganization the following year.

Industry Reference

The fall of Neta Auto is not an isolated case. The reason why it is worth dissecting is that it stands exactly at the node where the industry logic switches.

2025 is the beginning of differentiation in the new energy vehicle industry, which can be described as "extreme contrast between fire and ice": on the one hand, leading car companies are seeing soaring sales and leading technologies; on the other hand, some brands are suffering losses and exiting, and industry reshuffling is accelerating. This year, the sales list of new car-making forces has once again ushered in a pattern reshuffle: Leapmotor topped the list with 596,600 units, followed by Harmony Intelligent Mobility Alliance with 589,100 units, XPeng ranked third with 429,400 units, while the former "top student" Li Auto only delivered 406,300 units, a year-on-year decline of 18.81%, becoming the only brand in the leading camp with negative sales growth.

More important than the ranking change is that the competition logic of new car-making forces has quietly undergone a fundamental transformation — the stage of judging heroes by delivery volume and seizing market share by scale is turning over. Profit, efficiency, technology transformation and continuous investment have become the new competition points. The most critical node is that new energy vehicle companies, which used to take losses as normal, have begun to make profits collectively.

In 2025, Leapmotor achieved full-year profit for the first time, with a net profit of 540 million yuan; Li Auto has been profitable for three consecutive years, with a net profit of 1.139 billion yuan; NIO and XPeng achieved their first single-quarter profit in the fourth quarter, with net profits of 280 million yuan and 380 million yuan respectively. The leading new car-making forces have collectively crossed the break-even line, which was almost unimaginable a few years ago.

However, crossing the break-even line does not mean the end of the competition. Leapmotor, which earned 540 million yuan last year, was back to loss in its 2026 Q1 financial report: its gross profit margin fell from 15% to 9.4%, with a net loss of 390 million yuan, burning more than 6.6 billion yuan in cash in one quarter. Until the second quarter, it strongly reversed the loss situation with a net profit of 600 million yuan in that single quarter. This shows that even the profit of the leading camp is still not stable enough.

Li Yanwei, an expert from the China Automobile Dealers Association, pointed out in March this year that the real profit inflection point needs to meet four conditions: uniform sales distribution, positive full-year free cash flow, profit after excluding subsidies, and profit under the full-cost caliber. None of the "NIO-XPeng-Li Auto-Leapmotor" camp has met all the conditions.

The exit of brands like Neta and the profit of leading new car-making forces jointly point to a conclusion: the competition of new energy vehicles has shifted from "who can sell more cars at a loss" to "who can sell more cars at lower costs and still make money". Neta proved with its cumulative loss of 18.3 billion yuan that scale itself does not create value, and only scale built on cost control and brand premium makes sense.

At the same time, changes at the regulatory level are also accelerating the elimination process. Since 2026, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the State Administration for Market Regulation have held many symposiums on the new energy vehicle industry, explicitly requiring to "resolutely resist disorderly price wars" and strengthen price monitoring and cost investigation. The State Administration for Market Regulation has also deployed relevant work to curb "involution-style" competition.

After the price war recedes, those enterprises that rely on selling vehicles at a loss to maintain sales volume will lose their last living space. From the perspective of the industry, this is not necessarily a bad thing, which means that resources will be concentrated faster to enterprises that truly have systematic capabilities.

Survival Rules

From the differentiated tide of the second half competition logic switch, several clear survival rules can be extracted.

The first rule: Cash flow safety is above everything else, and behind cash flow is hematopoietic capability and independent R&D capability. The direct trigger of Neta's collapse is the break of capital chain, but the root cause of the capital chain break is that it has not established any cost structure that can generate blood independently.

Also having gone through the darkest moment, NIO, which has lost hundreds of billions of yuan, can still survive. On the one hand, it is because founder Li Bin has strong financing capability, with continuous capital infusion from behind; on the other hand, NIO itself has hematopoietic capability, such as the BaaS battery as a service subscription service. The essential difference in loss quality can also be seen from the gross profit margin per vehicle: in 2023, NIO's average gross profit margin per vehicle was 12.3%, while Neta's was -14.9%.

In contrast, Leapmotor, the "dark horse" that also emerged from the low-to-medium end market, can achieve full-year profit with a scale of 596,600 units. The core lies in the cost advantage brought by full-stack self-development — adhering to full-stack independent R&D, mastering about 65% of the total vehicle cost, and also exporting technologies to FAW, Stellantis and other enterprises. Its gross profit margin jumped from 8.4% to 14.5% in 2025. However, Neta has long focused on the low-end market, with the proportion of R&D investment dropping from 15% in 2022 to 3.2% in 2024, obviously falling behind in core fields such as solid-state batteries and intelligence.

The second rule: Brand positioning must have "upward room for growth and downward bottom line", and the positioning is supported by technological generation advantages. Neta was trapped in the public perception of "cheap online ride-hailing vehicles", failed to move upward to the high-end market, and was squeezed by BYD and Wuling in the low-end market.

Li Auto's predicament in 2025 provides a reference: the reduction of its first-mover advantage in extended-range technology made the core market of Li Auto L-series extended-range vehicles precisely targeted by competitors. AITO, Deepal, XPeng, IM Motors and other brands are all deploying large extended-range SUVs positioned for family use, directly eroding its market. At the same time, Li Auto's attempt in the pure electric sector faces dual pressures of public opinion and production capacity, with pure electric vehicle sales only accounting for 13% of total sales, failing to form a relay for transformation.

No matter you are expanding from the low end to the high end, or transforming from extended-range vehicles to pure electric vehicles, the "leap" of product lines must be built on the basis of leading core technology generations. The 400V charging technology and entry-level infotainment chip of the early Neta S essentially used the previous generation of technology to fight the next generation of war, making failure inevitable.

The third rule: The end of the industry is not "manufacturing vehicles", but "building capabilities". A thought-provoking phenomenon is that new energy vehicle companies have just learned to make money by manufacturing vehicles, but they have collectively turned their attention to AI.

XPeng regards 2026 as the year of "mass production of dreams", and plans to mass produce three AI businesses: humanoid robots, flying cars, and Robotaxi; Li Xiang, founder of Li Auto, clearly stated that 2026 is "the key year for the transition from intelligent electric vehicle enterprises to embodied intelligence enterprises"; NIO's Shenji chip has completed the first round of equity financing, and the next-generation chip is expected to be widely used in the fields of autonomous driving and robotics. When the core capability of car companies shifts from "manufacturing vehicles" to "building intelligent agents", those brands that only have assembly capabilities will completely lose their reason to exist.

The wheels of the industry are rolling forward, and stories of "revival" are constantly staged. Since last year, WM Motor announced its return through the *White Paper to Suppliers*, Ji Yue submitted a pre-reorganization application, HiPhi introduced Middle East capital, and Neta was recently planned to be taken over by Taiyi Shenglian with 3 billion yuan. The essence of these "revivals" is the low-cost reuse of scarce assets such as vehicle manufacturing qualifications, production lines, and supply chain systems, rather than the true rebirth of the original brands. It is the assets that are revived, while the brands are gone.

The "Red Church Master" has long seen through the essence and does not want to suffer a loss again.

This article is from the WeChat Official Account "Shuke Society" (ID: sktxs0), written by Beiye, and authorized for release by 36Kr.