From Market Leader to Bankruptcy: NETA Auto’s Struggle in the New Energy Car Industry

On May 13, a bankruptcy reorganization filing for HEZON New Energy Automobile Co., Ltd., parent company of NETA Auto, was submitted to the Jiaxing Intermediate People’s Court in Zhejiang Province by Shanghai Yuxing Advertising Co., Ltd. The news sent shockwaves through the automobile industry, raising questions about the survival of the once-celebrated new energy car brand. Although NETA Auto quickly clarified that the filing was initiated by a third-party advertiser and not the company itself, industry analysts warn that the Plug-in Hybrid Electric Vehicle (PHEV) and battery car maker’s downward spiral shows no signs of reversal.

From "King of Affordable EVs" to Systemic Collapse

Just three years ago, NETA Auto dominated China’s new energy vehicle (NEV) market with annual sales of 152,000 units, outperforming rivals like NIO and XPeng. However, its rapid decline highlights the brutal competition in the Plug-in Hybrid Electric Vehicle and battery car sectors. The brand initially thrived by targeting budget-conscious consumers with its sub-100,000 RMB (14,000)modelsliketheNETAVandNETAU,whichgainedtractionthroughpartnershipswithride−hailingplatforms.Yet,thislow−coststrategybackfiredascompetitorslikeBYDandGeelyfloodedthe100,000-200,000RMB(14,000)modelsliketheNETAVandNETAU,whichgainedtractionthroughpartnershipswithride−hailingplatforms.Yet,thislow−coststrategybackfiredascompetitorslikeBYDandGeelyfloodedthe100,000–200,000RMB(14,000–28,000) sedan and pickup segments with technologically advanced PHEVs and battery cars. NETA’s attempts to pivot upmarket—such as the ill-fated NETA S sedan and NETA GT sports car—failed due to weak smart features and pricing missteps, achieving only 51% of their 2023 sales target.

Compounding these issues, mismanagement eroded the automaker’s foundations. R&D spending plummeted from 12.3% of revenue in 2021 to 3.2% in 2024, leaving critical technologies like autonomous driving systems outdated. By 2025, NETA’s debt-to-asset ratio hit 217%, while its dealership network crumbled under pressure to meet unrealistic sales quotas. Car dealers resorted to "inventory buyouts," triggering price wars and eroding consumer trust. Meanwhile, key suppliers like CATL and Bosch halted deliveries over unpaid bills, paralyzing production lines.

Industry Shakeout and Capital Flight

NETA Auto’s crisis coincides with a broader transformation in China’s new energy car market. As Plug-in Hybrid Electric Vehicles and battery cars surpass 50% penetration in 2025, consumers now prioritize advanced tech and brand reputation over affordability. Tesla’s price cuts and BYD’s economies of scale have squeezed smaller players, while regional subsidies increasingly favor local automakers. For NETA, which relied heavily on subsidies in lower-tier cities, the policy shift proved devastating.

Financially, the company is teetering. Early investors like Hua Ding Capital exited en masse by 2024, leaving state-backed entities as reluctant lifelines. A planned $420 million Series E round remains stalled, with funds earmarked first for debt repayment. Overseas markets offered little respite: despite overpricing its models by 110% in Thailand, NETA achieved just 30% of its 2024 export goals. Worse, its "debt-for-equity" restructuring plan—converting 70% of supplier debt into nearly worthless shares—has alienated partners.