(Yicai Global) May 24 -- Aiways Holdings, a Chinese new energy vehicle startup backed by Tencent Holdings, has terminated the lease on its headquarters building in Shanghai.

“The HQ has been empty for over a week, as the lease has been canceled,” a staffer at the property manager of the industrial park where Aiways’ Shanghai office was located told Yicai Global during an on-site visit.

An Aiways insider said the carmaker’s staff in the city are working from home, and Yicai Global also learned that the Shanghai-based company has not yet paid salaries for March and April, with those for this month will likely to be delayed as well.

Founded in 2017 by Fu Qiang, who previously held senior positions at Mercedes-Benz, Audi, and Volvo, Aiways has raised nearly CNY10 billion (USD1.4 billion) from well-known Chinese companies such as Tencent, Contemporary Amperex Technology, and Didi Global.

Many Chinese NEV startups, including WM Motor, Enovate Motors, and Hengchi Automobile Trading, have hit operational difficulties since the start of this year due to increasingly fierce competition and frequent capital chain problems caused by poor financing.

In the past three years, about 75 car brands in China closed, suspended operations, merged with peers, or switched business focus, Changan Automobile Chairman Zhu Huarong said earlier this month. In the next two to three years, even by a conservative estimate, 60 to 70 percent will be eliminated, Zhu added.

Since being set up, Aiways has only released two car models. As it has been mainly focused on the European market, it missed out on the growth opportunities brought by the fast development of the Chinese market.

Aiways’ first mass-produced vehicle, the Aiways U5, was launched in December 2019, priced from CNY197,900 to CNY292,100 (USD28,480 to USD42,035). It sold less than 3,000 units in 2020, 2021, and in the first eight months of last year, and only 536 in the first quarter of this year.

In March 2021, Aiways cut salaries, canceled year-end bonuses, and failed to pay suppliers. Moreover, the company was said to have salary arrears in November of that year.

Chen Xuanlin, chairman of Guangdong Microholdings, which invested in Aiways several times, poured hundreds of millions of US dollars into the carmaker early last year to try to solve the financial difficulties brought in by poor sales.

Chen was later named Aiways’ new chairman and Zhang Yang its new chief executive. Soon after, the firm unveiled plans to go public in the United States via a special purpose acquisition company. But after Chen resigned last November, the firm did not release any further updates on the listing.

Last September, China Liberal Education Holdings said it had reached a non-binding agreement to acquire Aiways at a valuation of between USD5 billion and USD6 billion. But China Liberal pulled out of the deal on April 30, the educational services provider said on May 2.

Editors: Tang Shihua, Futura Costaglione