(Yicai Global) July 1 -- New energy vehicle startup Byton has halted production in China from today. All staff, except for those in key posts, have downed tools.

Nanjing-based Byton expects to stop production for six months, it announced yesterday. During this shutdown, all furloughed workers will get their July salaries, and will be paid from August, but without bonuses, allowances or benefits, The Paper reported, citing the announcement.

"The new coronavirus pandemic has brought great challenges to Byton's financing, production and operations. After careful consideration and joint consultation between shareholders and management, the company has decided to institute a plan to reduce labor costs and promote the company's strategic reorganization from July 1. The move is fully supported by core shareholders," Byton told Yicai Global.

"The Covid-19 pandemic has had a huge impact on the economy. No industry or enterprise can survive alone, and Byton is therefore facing huge challenges," said Wang Bo, director of the firm's public relations department.

Postponing Payment

The firm will defer disbursement of a portion of employees’ salaries in China based on their ranks amid the current straits, and reduce pay by 80 percent for core management, all of whom are required to take part in the firm’s C round financing. Thousands of Byton employees have been working from home without pay for four months, but plan on holding the firm to account for their salaries.

Byton has raised CNY8.4 billion (USD1.2 billion) since its founding in 2017, but has not yet delivered its first model, the M-Byte SUV.

New energy vehicle startups Jiangsu Saleen Automotive Technology and the US Bordrin New Energy Vehicle are hemorrhaging cash, suppliers have frozen their accounts and courts have seized their assets, while their staff has also gone unpaid, per recent media reports.

"The capital market has become more rational, and the most urgent task for carmaking startups is to resolve the problem of capital. Since last year, many carmakers have begun to adjust their company structure. The shortage of funds is the main dilemma they face," car industry analyst Cao He said.

Only eight startup carmakers, among them Nio, Lixiang Automotive and Xiaopeng Motors, gained new car sales in May, per monthly data from the China Automobile Dealers Association.

Editor: Ben Armour