Author | Chen Fashan
Editor | Liu Yang
In the myth, after Nezha committed suicide, Master Taiyi used lotus flowers to reshape his body so that he could be reborn. I originally thought this was a fabricated myth, but unexpectedly it became reality.
Nezha Automobile has been idle for nearly two years. When the hope of resuming production is getting increasingly slim, Zhejiang Taiyi Shenglian Enterprise Management Partnership (Limited Partnership) (hereinafter referred to as: Taiyi Shenglian) became its restructuring investor.
According to the “Interface” report, recently, Hezhong New Energy Vehicle Co., Ltd. (hereinafter referred to as “Hezhong Automobile”), the parent company of Nezha Automobile, held the fourth creditors meeting in the bankruptcy and reorganization case to discuss the “Reorganization Plan (Draft)” proposed by Taiyi Shenglian (hereinafter referred to as “Draft”).
The “Draft” plans to invest 3 billion yuan to “resurrection” Nezha Automobile, with an annual production target of 300,000 vehicles, and to start IPO preparations. Similar visions are not unfamiliar. They have also appeared in the restructuring plans of WM Motor and Gaohe Automobile before. However, in the end, the money was not in place, and there was no further progress.
Is Nezha Automobile’s restructuring a real industry restart or another capital story?
1. Nezha is waiting for the “savior”?
As early as the end of 2021, NIO founder Li Bin said during the NIO Day that year that the capital threshold for building a car would not be possible without 40 billion. Now five years have passed, how much money has Taiyi Shenglian prepared to “resurrect” Nezha Auto? The answer is 3 billion yuan.
The “Draft” provides a rather specific “resurrection” plan. Taiyi Shenglian plans to invest 3 billion yuan to acquire approximately 70.62% of the shares of Hezhong Automobile and become the controlling shareholder. The money was divided into two parts, of which 1.167 billion yuan was planned to be used to pay off the claims corresponding to the retained assets, bankruptcy expenses and reorganization costs. The remaining 1.833 billion yuan is used as working capital, mainly used to start production resumption, supply chain reconstruction, after-sales maintenance and daily operations. In other words, the money actually used to “build cars” only accounts for 60% of the total investment.
Compared with starting from scratch, the resumption of Nezha production seems to have factories and assembly lines as the foundation, but in fact it has to face a more complicated situation. The balance sheet of Hezhong Automobile disclosed in the “Draft” is not easy. Among them, the priority debt is about 2.2 billion yuan, involving 9 creditors. Only interest is paid in the first three years and repaid in installments starting from the fourth year. The general debt is about 11.7 billion yuan, involving more than 1,600 households. For the part of less than 800,000 yuan in a single transaction, the comprehensive repayment rate is about 12%. An initial payment of 10,000 yuan will be paid within 12 months, and the balance will be paid off within two years; for the part exceeding 800,000 yuan, all debt-to-equity swaps will be implemented, and there will be no cash payment.
The 12% liquidation rate means that only about 10% of the payment advanced by the supplier will be recovered in the end. Whether such a disposal plan can rebuild trust in the supply chain during the subsequent resumption of production is still unknown.
With limited funds, it is destined that Nezha’s “resurrection” will not bloom more. The “Draft” made a selection of Nezha’s products before the suspension, retaining the production lines and equipment corresponding to Nezha X and Nezha L as core operating assets after reorganization, indicating that it will focus on the economical SUV track in the future. However, the Nezha S, Nezha GT models and related equipment, which were previously intended to hit the high-end and benchmark the front-line, were relegated to the “limbo” and were separately disposed of for cash.
Even if Nezha’s resurrection plan can be implemented smoothly, in the extremely involved domestic market, how many consumers who are worried about buying an “out-of-print car” will be willing to pay the price? Under such a market environment, going overseas has become a more realistic choice for Nezha. The sales target in the first year is set at 10,000 vehicles. Obviously, such sales data are not eye-catching. Therefore, the “Draft” plans for subsequent development, including developing adapted models for the Asian, African, and Latin American markets, with an annual output of 300,000 units; and continuing to build global smart models, achieving an annual output value of 40 billion yuan, and starting preparations for an IPO.
But behind this plan, there is also a more realistic bottom line. Nezha Automobile has been suspended for nearly two years. According to relevant regulations, if the average annual passenger car production of an automobile company is less than 2,000 units for two consecutive years, it will be deemed to be unable to maintain normal production and operations. The Ministry of Industry and Information Technology will make a special announcement, and no changes in access will be processed during the announcement period.
Nezha’s “dual qualifications for car manufacturing” are its most important intangible assets. Once lost, reorganization will become more difficult. This means that this reorganization is not just about resurrecting a production line, but a battle to defend production qualifications.
Even so, whether the “Draft” can be implemented is still uncertain and needs to be approved by creditors’ vote and court ruling. What is more realistic is that the 3 billion yuan of funds has not yet been paid in. If any link changes, the reorganization plan may remain on paper.
2. Can’t do more than three things?
Although the names of Taiyi Holy Lotus and Nezha are in line with the story setting of “The Romance of the Gods”, what deserves more attention than this is the equity relationship and funding arrangements behind them.
Qichacha information shows that Taiyi Shenglian was established in April 2026 and was jointly funded by Zhejiang Shanzi Holding Co., Ltd. and Zhejiang Shanzi Yuxu Technology Co., Ltd. The actual controller of the former is Ye Ji, the chairman of Shanzi High-tech, and the actual controller of the latter is Yu Shuxin, the head of the board of directors of Shanzi High-tech. The “Draft” calls it a “dedicated entity for this reorganization”. The management team has experience in automobile industry operations and bankruptcy reorganization, and has completed the bankruptcy reorganization of listed companies in the parts industry.
Affected by the news of restructuring, Shanzi Hi-Tech’s stock price hit the daily limit at the opening on September 14. On September 15, Shanzi High-Tech announced that there is no equity control relationship between the company and Taiyi Shenglian, and the company has not directly or indirectly participated in the bankruptcy and reorganization investment of Nezha Automobile through its controlling entity; the company’s controlling shareholder plans to participate in the bankruptcy and reorganization investment of Nezha Automobile through its controlling entity. It is still in the intention stage, and there is great uncertainty about whether the relevant procedures can be completed and approved.
Judging from the caliber of the announcement, there has been a division of responsibilities between Shanzi Hi-Tech and Taiyi Shenglian. But the market is no stranger to the “Shanzi Series” car manufacturing controlled by Ye Ji. The predecessor of Shanzi Hi-Tech, Yinyi Shares, was engaged in the real estate industry. It was deeply involved in a debt crisis and went through bankruptcy and reorganization. It was reborn by transforming into the auto parts industry. This experience allowed Shanzi Hi-Tech to accumulate experience in corporate restructuring, and also made Ye Ji always obsessed with vehicle qualifications.
However, the “Shanzi Department” controlled by Ye Ji has been involved in vehicle projects twice before, but the results were not satisfactory. In Hebei, the “Shanzi Group” acquired Red Star Motors, renovated the factory and put into use logistics and distribution vehicles, but its passenger car qualifications were subsequently cancelled. In Heilongjiang, the “Shanzi Group” once revitalized the original Hafei Automobile Factory to produce Yunfeng Automobile for export to Russia. The final project fell short of expectations and ended with the sale of part of the equity.
But this time, the difficulty only increased. The 3 billion yuan investment has not yet been paid, and Taiyi Shenglian has only paid a 50 million yuan deposit. Only 1.833 billion yuan is actually used for production and operations. It must not only restart production lines, rebuild the broken supply chain, but also build overseas sales networks and after-sales systems, which is not generous for vehicle manufacturing. It will take a long time to form a team, restore channels, and re-integrate.
At the same time, Nezha’s brand reputation in the domestic market has been severely damaged since the shutdown, and there is a backlog of after-sales debts for hundreds of thousands of existing car owners, making it difficult to restart the domestic market. Therefore, the restructuring plan places its bet on going to sea. At the creditors meeting, Taiyi Shenglian stated that it had obtained some overseas intended orders. However, as leading domestic car companies have accelerated their overseas expansion in recent years, competition in markets such as Southeast Asia and Latin America has become fierce. If new entrants want to gain a foothold, they need both product competitiveness and price advantages. This requires continuous capital investment. It is difficult to support long-term product research and development and market expansion with only more than 1.8 billion yuan in start-up capital.
More importantly, the failure of two vehicle projects in the past has also made the outside world question Ye Ji’s operation this time. At least judging from past records, it does not have an advantage in vehicle manufacturing experience or project management capabilities. Taking over Nezha this time is essentially a high-risk game.
3. Big changes in the industry
While the draft to “resurrection” Nezha is still on paper, two major signals have been sent from the automobile industry recently.
On September 15, Cyrus and Huawei Hongmeng Smart announced that the product definition, brand marketing, channel retail and service system of Wenjie will be changed from “Huawei-led” to “Cylis-led, Huawei-empowered”. Huawei will participate in an asset-light manner and shift resources to Zhijie, Enjoy the world, Respect the world, and Shangjie. Consumers are accustomed to viewing the industry as “Huawei’s own son”, but in the face of actual sales and interests, they have still reached the stage of “separation”. After the news was announced, Cyrus A shares closed down 5.09% that day.
Just the day before, Guangzhou Automobile Group suspended trading and issued an announcement stating that it planned to issue shares to acquire the equity of the vehicle joint venture held by FAW. The market generally expects that this points to FAW Toyota. If the transaction is completed, FAW will become the second largest shareholder of GAC. FAW Toyota and GAC Toyota are expected to integrate to open up channels and models to avoid internal friction in repeated competition.
The cooperation between Huawei and Wenjie was previously considered a model for the industry, but in the face of interest considerations, it was forced to “separate”; the cooperation between FAW and GAC is a rare alliance between a central enterprise and a local state-owned enterprise. Both show that in the context of intensified industry competition, even leading car companies need to reduce costs and shrink to improve their survival rate. In contrast, can Nezha, a “cold start” company, do better than these leading car companies in terms of product strength, cost control, and consumer confidence?
What is even more noteworthy is that Weimar and Gaohe have previously proven that once a shutdown occurs, even if the reorganization plan is passed, it does not mean that the company can survive in the market again. After WM ceased production, its restructuring investor Xiangfei promised to invest 1 billion yuan in the initial stage, but the funds have not been actually paid, and its associated Baoneng Department itself is in deep debt crisis. “Leopard Change” has visited its Wenzhou factory many times and found that although there are security guards on duty at the gate, the resumption of production is still on paper because funds have not been received. Although Gaohe, which took the high-end route, attracted overseas investors, the market capacity and residual value of the brand could not support the investment in resumption of production, and the restructuring stalled. The similar endings of the two indicate that without sustained sales and cash flow, the restructuring may be just a blank check.
Similarly, what Nezha has to answer is not just “can production be resumed?” In the current industry environment, even if the funds in the “Draft” arrive, it will only press the start button, and there is no guarantee that Nezha will enter the safe zone. After resumption of production, supply chain trust, channel reconstruction, after-sales undertaking and overseas expansion all require subsequent cash flow relay. Cash flow ultimately depends on sales, which in turn depends on brand trust, which takes more time than restarting the production line.
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