The ghost of industrial ambition now haunts the Jiangxi Yichun Economic Development Zone, where a 600-acre 'smart factory' that once symbolized the future of Chinese mobility sits in silence. Dust covers the assembly lines of Neta Auto, the flagship brand of Hozon New Energy Automobile, which was recently called out by state broadcaster CCTV for its spectacular financial failure. What was marketed as a crown jewel of local investment has instead become a cautionary tale of how regional governments across China have gambled public funds on a hyper-competitive electric vehicle (EV) market.
Between 2021 and 2023, Hozon New Energy hemorrhaged a staggering 18.3 billion RMB (approximately $2.5 billion), representing an average loss of over 80,000 RMB for every vehicle sold. This fiscal bleeding eventually forced the company into bankruptcy restructuring by late 2024, leaving state-owned investors in cities like Yichun and Nanning facing the total loss of their capital. The collapse highlights a structural crisis where local cadres, desperate for industrial growth, engaged in 'inward-looking competition' (neijuan) to lure manufacturers at any cost.
In Yichun alone, the local government shouldered the vast majority of a 5 billion RMB project, with state-owned platforms contributing 2 billion RMB for equity and another 300 million RMB for land and facilities. To ensure the project’s arrival, officials waived rent for a decade and even offered a 20,000 RMB bounty for every car sold locally. These aggressive incentives often skirted or directly violated national regulatory frameworks, yet they were replicated in other hubs like Nanning and Tongxiang, where Hozon secured billions more in subsidies and debt-backed construction.
The fallout has been swift and severe. Following months of salary delays and layoffs, Hozon’s CEO Zhang Yong stepped down in December 2024, leaving founder Fang Yunzhou to navigate the wreckage of a company now being picked over by creditors. With production lines across three major bases paralyzed, the company is currently attempting a desperate 'common benefit debt' recruitment drive, seeking a mere 100 million RMB just to maintain core operations during the restructuring process.
Neta’s trajectory is not an isolated incident but part of a broader shakeout of China's bloated EV sector, which once boasted over 300 brands. Similar bankruptcy filings by Highphi, Byton, and WM Motor suggest that the era of state-subsidized expansion is ending. As Beijing signals its displeasure through state media exposures, the focus is shifting from raw production capacity to the sustainability of the local government investment models that fueled the bubble.