Article by Sina Technology, Zhou Wenmeng.

The aftermath handling plan for Jiyue employees 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 provident fund contributions will be paid until December 2024. Additionally, a regulatory co-management account will be established under the guidance and supervision of relevant government departments to pay related expenses, with the initial funding provided by Baidu and Geely.

According to multiple insiders from Baidu and Jiyue, as of now, the aftermath funding provided to Jiyue by investors Baidu and Geely has reached several hundred million yuan. Jiyue's Chief Operation Officer, Luo Gang, revealed during a communication with employee representatives that "shareholders spent several hundred million."

This amount of money is provided by Baidu and Geely as advance payments, the specific distribution ratio has not been disclosed to the outside world. It is reported that on the night of December 12, internal transfers between Baidu and Geely were made to pay overdue social insurance for November for Jiyue employees. It was understood that Baidu and Geely paid according to the equity ratio of both companies at that time. According to reports, Baidu's equity ratio currently exceeds 40%, while Geely's equity ratio exceeds 30%.

According to the latest revised Chapter 1, Article 4 of the Company Law, Jiyue is a limited liability company, which means that shareholders are liable to the company only up to the amount of their subscribed capital; shareholders of a joint stock company are liable to the company only up to the number of shares they have subscribed.

From the perspective of industry insiders: "From the company's standpoint, Baidu and Geely, as investors, do not have an obligation to underwrite Jiyue; both parties' actions are more out of social responsibility."

With Baidu and Geely having essentially fulfilled their legal responsibilities towards Jiyue, the extreme pulling by Jiyue and its shareholders, employees, and other related parties is also nearing its end.

Recently, Sina Technology had in-depth exchanges with several Jiyue employees and insiders related to Baidu, deeply restoring the basic picture of this wave of turmoil.

"Baidu continues to invest, Geely did not follow up on the Series C round, and the Jiyue management has not found new investors."

According to previous reports, some insiders from Jiyue revealed that the trigger for this crisis was the shareholders Baidu and Geely no longer providing support, leading to a cash shortage for the company. "In particular, in the first half of this year, Jiyue reached an agreement with its shareholders for a new round of financing, which was originally planned to receive a $3 billion investment in the second half of this year, but later the shareholders backed out, leading to this Jiyue crisis."

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 source stated, "The entire investment process is actually dynamic; the amount a company decides to invest is often governed by agreements or other documents, and it is impossible to say that Baidu had already reached an agreement with him and then backed out of the investment."

Reviewing 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 the vehicle manufacturing tasks.

It is reported that in January 2021, Jidu was established and received over $0.3 billion in initial funding, of which Baidu contributed 0.171 billion USD.

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

In 2022, Jiyue's Series B financing reached 0.4 billion dollars, with Baidu contributing 0.192 billion dollars.

In the fourth quarter of 2023, Jiyue secured 0.25 billion dollars in Series C financing, with Baidu contributing 0.65 billion yuan.

According to the aforementioned sources, in the last round of C financing obtained by Jiyue in the fourth quarter of 2023, Baidu provided significant support with 0.65 billion yuan contributed towards the total financing of 0.25 billion dollars, but at that time, "Geely had already stopped continuing to invest." The source pointed out that, "From Jiyue's second round of financing, the total financing amount was nearly 0.4 billion dollars, with Baidu investing 0.2 billion dollars. In later rounds, Baidu generally matched the investment 1:1 for continuous investment in Jiyue. As long as Jiyue's management finds financing, Baidu will provide roughly equivalent funds. Since Jiyue failed to bring in new financing this year and other old shareholders were also unwilling to invest, Baidu ultimately did not invest either.

A 7 billion hole continues to bleed money for investors.

Previously, media reports indicated that Jiyue had a hole of up to 7 billion yuan. Insiders said, "This includes not only the money owed for Geely's contract manufacturing fees but also more than 1 billion owed to Baidu, while the accounts payable to suppliers that have attracted public attention are not as high as rumored, totaling about 1 billion or so."

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

It is reported that Liu Jining, Jiyue's CFO who just left in October, was appointed by Geely. During his tenure, Geely's payment speed was quite fast, and the actual losses were not as high as reported by the outside world.

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

"Jiyue loses 0.05-0.07 million gross profit and has a negative margin of 30% for each unit sold."

In the view of some Jiyue insiders, the root cause of this crisis lies in the poor financing ability of the Jiyue management, including Xia Yiping. It has been revealed that, "Since the establishment of Jiyue, the company has maintained an open attitude towards financing, and investors have been actively helping to find financiers, but the Jiyue management has yet to submit a financing plan to the shareholders' meeting."

"As an independent operating entity, the management has the obligation to seek external resources. The company has long relied on old shareholders for blood transfusions while also selling cars at a loss to boost sales," revealed the aforementioned insider.

Previous reports from relevant media indicated that Jiyue loses 0.05-0.07 million for each car sold, with a single-car gross profit margin of -30%, indicating that the problems had already been established.

In a long apology letter published on December 16, Xia Yiping took responsibility for the predicament that Jiyue currently faces. Xia disclosed, "Strategically, I did not do well; fundraising should have been my most important responsibility, but I was overly optimistic in the early stages and did not foresee the seriousness of the funding issues."

Xia Yiping also mentioned some issues in his personnel choices, stating, "In certain positions, I overlooked the true match between positions and talent. Many leaders of core business areas do not have sufficient industry experience, resulting in the team being unable to handle key tasks. Frequent personnel changes in marketing and organizational management have led the company into internal strife, wasting time and opportunities."

"To handle the aftermath of Jiyue, Baidu and Geely spent over a billion."

On December 19, a document photo of Jiyue employee's aftermath plan was exposed online. The document shows that Jiyue will provide "N+1" economic compensation for departing employees, with social insurance and housing fund contributions continuing until December 2024. For employees in the "three periods" (pregnancy, childbirth, and nursing), work-related injuries, or medical leaves, the principle is to retain their positions until the respective situations end.

Under the guidance and supervision of relevant government departments, a regulatory co-managed account has been established to pay related expenses for Jiyue employees, with the funds advanced by Baidu and Geely.

According to sources within Jiyue, Sina Technology learned that "the leaked document photo of the aftermath plan is consistent with the document received, the company is indeed moving forward with the aftermath processing." One Jiyue employee revealed, "During the live broadcast of the aftermath plan on the 19th, Xia Yiping did not appear. The entire plan was mainly hosted by Jiyue COO Luo Gang, with attendees primarily consisting of representatives from relevant government departments, Jiyue employees, and Jiyue management."

It is reported that during the communication process, Luo Gang revealed, "To handle the aftermath of Jiyue, shareholders Baidu and Geely have already spent over a billion, and will not cut back on this small amount for December employee social insurance." In the circulating video, Luo Gang introduced the relevant aftermath plan to all employees, and there were bursts of applause from the audience, with some employees stating, "Finally, there is a good outcome."

Additionally, sources close to Baidu revealed that discussions are ongoing regarding how to allocate the funds for the employee aftermath, but it is highly likely that it will align with the funding proportions shared by various shareholders when making up for employees in November, with Baidu and Geely also sharing according to their stock ratios.

"Liquidation bankruptcy may be Jiyue's destiny."

Employees at Jiyue have revealed that most staff understand and accept the current company proposal. "The Auto Industry is quite competitive now, and the management's negligence and improper staffing have led to the current crisis. It's unfortunate that Baidu and Geely are here to support us. " Many employees stated.

It is reported that most Jiyue employees are already considering new opportunities. Several insiders predict that in the future, while retaining necessary maintenance functions, the number of employees may be reduced to what the cash flow can support for operation. If new funding comes in, there may be a turnaround, but if not, 'bankruptcy liquidation' may be inevitable.

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 clear: the company is facing severe operational challenges, with the CEO making errors and omissions in strategic formulation and internal management, leading to unclear focus in business, products, and personnel, resulting in excessive costs and ultimately a broken capital chain.

From a rational perspective, according to relevant legal provisions, shareholders, directors, and executives each have clear responsibilities and powers in corporate governance. According to the recently revised Article 4 of the first chapter of the Company Law, Jiyue is a limited liability company, which means shareholders are liable to the company only up to their subscribed capital contribution; the shareholders of a joint-stock company are liable to the company only up to the shares they have subscribed.

"From the company's perspective, Baidu and Geely, as shareholders, do not have an obligation to cover for Jiyue. Their actions are more out of social responsibility," Zhu Wei stated. This means that Baidu and Geely, as shareholders, have already fulfilled their legal responsibilities towards Jiyue as stipulated in the Company Law.

For many more employees at Jiyue, after the company's follow-up plan comes out, how to adjust their mindset and embark on the next phase of their life journey will still require some psychological preparation.