(Yicai) Nov. 14 -- Hozon Auto will significantly reduce the size of its first-tier and second-tier departments by merging them, slashing its staff headcount and other measures, and will make more use of artificial intelligence tools, to cut operating expenses by more than 50 percent so as to break even by February next year, the Chinese electric car startup told Yicai yesterday.

This strategic adjustment will allow Hozon Auto, which produces electric cars under the Neta brand, to focus more on expanding its overseas footprint, while continuing to produce cars in China, the Shanghai-based company said.

Nanning Industrial Investment Group has agreed to provide financial support to help Hozon Auto with its supply chain, the procurement of raw materials, production, logistics as well as its knock-down parts export business at the company’s Nanning base, Hozon Auto said, citing an agreement recently reached with its unit Hezon New Energy Automobile. This will assist the firm’s exports of autos and help expand its footprint in the international market to ensure the stability of its overseas supply chain.

Hozon Auto has received a lot of bad publicity recently amid online rumors that the carmaker has been cutting salaries, not paying wages on time and is being sued by suppliers. There are also reports that it has been conducting mass lay-offs, reducing its headcount by as much as 70 percent.

Hozon Auto has been struggling in China’s fiercely competitive EV market. Founded in 2018, the firm was China’s best-selling new energy vehicle maker in 2022 with sales of 152,100 units. However, shipments plunged 16 percent in 2023 year on year to just 127,500 autos. In the first nine months, Hozon Auto had only achieved 28.6 percent of its annual target at 85,900 deliveries.

Despite the poor performance at home, Hozon Auto is doing well overseas, due to less fierce competition and wider profit margins.

Last month, Hozon Auto accounted for the second-highest number of NEVs that were licensed in Thailand, a 55 percent jump from the previous month, according to data from the Federation of Thai Industries. In addition, it is reported that the company’s gross profit will expand by between 10 percent and 15 percent thanks to its overseas sales.

Editor: Kim Taylor