Article by Sina Technology, Zhou Wenmeng.

The aftermath handling plan for employees at Jiyue has finally been settled.

On December 19, a photo of the aftermath plan document for Jiyue employees was exposed. The document shows that Jiyue will provide departing employees with "N+1" economic compensation, and social insurance and housing fund contributions will be paid until December 2024. Additionally, a supervisory co-managed account will be established under the guidance and witness of relevant government departments to pay for related expenses, with the funds advanced by Baidu and Geely.

According to insiders from Baidu and Jiyue, as of now, the aftermath funds paid to Jiyue by its investors Baidu and Geely have reached several hundred million yuan. Jiyue's Chief Operating Officer, Luo Gang, revealed during discussions with employee representatives that "Shareholders have spent over several hundred million."

This money is advanced by Baidu and Geely, although the specific ratio has not been disclosed to the outside world. It is reported that on the evening of December 12, internal transfers were made by Baidu and Geely to pay for the overdue social insurance for November for Jiyue employees. It is understood that at that time, Baidu and Geely made payments according to their respective shareholdings. Currently, Baidu holds more than 40% of the equity, while Geely holds over 30%.

According to the latest revised Article 4 of Chapter 1 of the Company Law, Jiyue is a limited liability company, which means that shareholders bear liability for the company to the extent of their subscribed capital; shareholders of a joint-stock company bear liability for the company to the extent of their subscribed shares.

Industry insiders believe that from the company's perspective, Baidu and Geely, as investors, do not have an obligation to backstop Jiyue; their actions are more based on social responsibility.

As Baidu and Geely have basically fulfilled their responsibilities under company law, the extreme pulling and tugging by Jiyue and its shareholders, employees, and other relevant parties is also coming to an end.

Recently, Sina Technology had in-depth exchanges with several Jiyue employees and informed individuals related to Baidu, deeply restoring the basic situation in this turmoil.

"Baidu continues to invest, but Geely did not participate in the Series C round, and the Jiyue management has not found new investors."

According to previous reports, insiders from Jiyue revealed that the trigger for this crisis was that shareholders Baidu and Geely no longer provided support, leading to a cash shortage for the company. "In the first half of this year, Jiyue had negotiated a new round of financing with shareholders, originally planned to receive a 3 billion financing in the second half of this year, but later the shareholders backed out, leading to this crisis for Jiyue."

Sina Technology learned that the actual situation was not as described by the aforementioned Jiyue employees.

An insider from Baidu revealed to Sina Technology that, in fact, "the so-called Baidu wanting to invest 3 billion yuan in Jiyue does not exist at all." The aforementioned individual stated, "The entire investment process is dynamic; enterprises decide how much to invest, and there will usually be agreements or other documents. It’s impossible to say that Baidu already had an agreement with him and then backed out of the investment."

Looking back at Jiyue's previous four rounds of financing, it can be seen that Baidu has been continuously investing, while Geely’s factory has been responsible for vehicle manufacturing.

It is reported that in January 2021, Jidu was established and received more than 0.3 billion dollars of initial funding, with Baidu contributing 0.171 billion dollars.

On January 26, 2022, Jidu announced that it had completed nearly $0.4 billion in Series A financing, with Baidu contributing $0.2 billion.

In 2022, Jidu's Series B financing size reached $0.4 billion, with Baidu contributing $0.192 billion.

In the fourth quarter of 2023, Jidu secured $0.25 billion in Series C financing, with Baidu investing 0.65 billion yuan.

According to the aforementioned sources, in Jidu's most recent Series C financing in the fourth quarter of 2023, out of the total financing of $0.25 billion, Baidu provided 0.65 billion yuan in significant support, but at that time, "Geely had already stopped following up on additional investments." The source pointed out, "Since the second round of financing for Jidu, the total financing amount was nearly $0.4 billion, of which Baidu invested $0.2 billion. In subsequent rounds, Baidu has generally continued to invest on a 1:1 basis with Jidu. As long as Jidu's management finds financing, Baidu will provide generally equivalent funds. Because Jidu was unable to attract new financing this year and other existing shareholders were unwilling to follow up on investments, Baidu also did not follow up on investments this time."

A 7 billion yuan hole: investors continuing to lose money.

According to previous media reports, Jidu has accumulated a debt of up to 7 billion yuan. Insiders say, "Of this, aside from the owed fees to Geely for contract manufacturing, there is also a debt of more than 1 billion yuan to Baidu. The supplier debts that have attracted public attention are not as high as rumored, totaling around 1 billion. "

"Although there are rumors that Jidu owes Geely nearly 3 billion yuan, Geely has also gained some revenue from car manufacturing, such as receiving several hundred million yuan in contract manufacturing fees, totaling 2-3 billion in income."

It is reported that Liu Jining, the recently resigned CFO of Jidu in October, was appointed by Geely. During his tenure, Geely's repayment speed was quite fast, and it wasn't as much of a loss as reported externally.

With the resolution of employee follow-up issues, the aftermath of Extreme Autos has also become a concern for car owners and consumers. According to publicly available information, the Extreme brand belongs to Geely, and is an automotive brand under the Geely Holding Group.

“Extreme Autos loses 0.05-0.07 million per vehicle, with a gross profit margin of -30%.”

In the view of some insiders at Extreme Autos, the biggest original sin that led to this crisis lies in the poor financing abilities of management, including Xia Yiping. It has been revealed that "from the founding of Extreme until now, the company has maintained an open attitude toward financing, investors have been actively helping to find investors, but the management has failed to submit a financing plan to the shareholder meeting."

“As an independent operating entity, the management has the obligation to seek external resources. The company has long relied on old shareholders for funding while also selling cars at a loss to increase sales,” said the aforementioned informed source.

Previously, related media reported that Extreme Autos loses 0.05-0.07 million for each car sold, with a single vehicle gross profit margin of -30%, the problems had been rooted long ago.

In a long apology letter released on December 16, Xia Yiping also took responsibility for the predicament that Extreme Autos currently faces. Xia Yiping publicly acknowledged: "In terms of strategy, I did not do well. Raising funds should have been my most important responsibility, but I was overly optimistic in the early stages and failed to foresee the seriousness of the funding issues."

Xia Yiping also mentioned some issues regarding personnel management, "In certain positions, the true match between positions and talent was overlooked, many leaders of core businesses do not possess sufficient industry experience, resulting in the team being unable to meet key tasks. Frequent personnel changes in marketing and organizational management led the company into internal conflict, wasting time and opportunities."

Baidu and Geely spent several hundred million to handle the aftermath for Jiyue.

On December 19th, a document photo of Jiyue's employee aftermath plan was exposed online. The document shows that Jiyue will provide departing employees with an "N+1" economic compensation, and social insurance and housing fund will be paid until December 2024. For employees who are in the "three periods" (pregnancy, delivery, breastfeeding), work-related injuries, or on medical leave, their positions will generally be retained until the corresponding situations end.

Under the guidance and witness of relevant government departments, a supervised joint account has been established to pay related costs for Jiyue employees, with the funds being advanced by Baidu and Geely.

Sina Technology learned from Jiyue internal employees that "the photo of the aftermath plan document circulating online is consistent with the document received, and the company is indeed advancing the aftermath handling." Some Jiyue employees disclosed that "at the live meeting for the aftermath plan held on the 19th, Xia Yiping did not appear, and the entire plan was mainly hosted by Jiyue COO Luo Gang, with attendees primarily including representatives from relevant government departments, Jiyue employee representatives, and Jiyue management."

It is reported that during the communication process, Luo Gang revealed that "for Jiyue's aftermath, shareholders Baidu and Geely have already spent several hundred million and will not cut the small piece of December's employee social insurance." In the circulating video, Luo Gang introduced the related aftermath plan to all employees, and there were frequent applause from the audience, with some employees expressing that "finally there is a good result."

Another informant close to Baidu disclosed that the funding for the aftermath for employees is currently under discussion regarding how it will be spent, but it is likely to be consistent with the equity contributions from each shareholder during the employee compensation reimbursement in November, and Baidu and Geely will also share the costs according to their equity ratios.

Liquidation and bankruptcy may be the fate of Jiyue.

Employees at Jiyue have revealed that most of them understand and accept the current proposals given by the company. "The Autos Industry is now extremely competitive; the management has failed and improper hiring has led to the current crisis. It is a stroke of luck that Baidu and Geely are there to support us," several employees stated.

It is reported that most internal employees at Jiyue are already considering new opportunities. Many insiders predict that, "In the future, apart from necessary maintenance departments, the number of employees may be reduced to what the Cash flow can support. If new funds come in, there may be a turnaround, but if not, 'bankruptcy liquidation' might be unavoidable."

Recently, Zhu Wei, an associate professor at China University of Political Science and Law, vice president of the Peking E-Commerce Legal Research Association, and a lawyer, pointed out regarding the Jiyue incident that, from a factual perspective, the situation has become basically clear. The company has encountered severe operational challenges; the CEO has made mistakes and oversights in strategic formulation and internal management, leading to unclear focus in Business, Products, and Personnel, resulting in excessively high costs and a broken capital chain.

From a rational perspective, according to relevant legal provisions, Shareholders, Directors, and executives each have clear responsibilities in corporate governance. According to Article 4 of Chapter 1 of the newly revised Company Law, Jiyue is a limited liability company, which means that shareholders are liable to the company only up to the capital contribution they have committed; in a joint stock limited company, shareholders are liable to the company only up to the shares they have subscribed for.

"From the company's perspective, Baidu and Geely, as shareholders, do not have the obligation to support Jiyue. The actions of both parties are more driven by social responsibility," Zhu Wei stated. This means that Baidu and Geely, as shareholders, have already fulfilled their responsibilities under corporate law regarding Jiyue.

For many employees at Jiyue, once the company's aftercare plan is released, adjusting their mindset and embarking on the next chapter of life will still require some psychological preparation.