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Polestar’s financial collapse
Polestar’s shares fell 95% from their peak, dropping to 22 cents and prompting Nasdaq to threaten a delisting. To stay on the exchange, the company announced an emergency reverse split, which only accelerated the price drop. In September 2025, Polestar issued a going‑concern warning, admitting that it might not survive the next year. The warning was a red flag that the numbers were telling a grim story. In the first half of 2025, the company posted a $1.19 billion loss, and its asset‑to‑liability ratio hit 217%, meaning it owed more than double what it owned. Cumulative losses since launch now exceed $6 billion.
Despite selling 14,192 vehicles in the last quarter—a 13% year‑over‑year increase—the gross margin slipped to a negative 6.1%. Polestar is losing money on every car that leaves the factory, creating an impossible situation for its dealers. The company also laid off 15% of its global staff in 2024, lost Volvo’s financial backing, and shut its UK engineering operations, including two R&D facilities in Nunaton and Coventry. The head of electrical engineering lamented the dismantling of seven years of work, calling it gut‑wrenching.
NIO’s European retreat
NIO, once hailed as China’s answer to Tesla, has sold only 163 vehicles in the first ten months of 2025 in the world’s largest EV market. The brand closed its last direct sales store and moved to an online‑only model. The move signals a clear admission of failure. In Europe, NIO built battery‑swap stations and “Neo houses” that required massive capital investment. Those stations became expensive obligations that drained resources while the company could not sell enough cars to justify them. In January 2026, NIO sold just 56 cars across all of Europe, and in Germany only one unit that month. By February, the total for Germany reached six vehicles.
Internal documents leaked to automotive media revealed that NIO dismantled its European management structure, transferred its sales division to headquarters in China, and abandoned its direct‑sales model entirely. The company is now scrambling to find dealers and distributors to take over sales. NIO’s German subsidiary lost more than 58 million yuan in 2023 operations alone. Cumulative losses for the entire company have exceeded 100 billion yuan, roughly $14 billion. In 2024, NIO lost about $100,000 on every vehicle delivered, a stark indicator that the brand is not just unprofitable but losing money on each car.
Lee Auto’s mounting challenges
Lee Auto, once celebrated for its hybrid SUVs, posted its first loss in three years in the third quarter of 2025. Revenue fell 36% year‑over‑year, and vehicle deliveries collapsed 39% from 152,831 units to 93,211. The company’s vehicle margin compressed from 21% to 15.5%. A massive recall of more than 11,000 units, triggered by battery‑related fire incidents, cost the company roughly 1.5 billion yuan to cover. The recall wiped out an entire quarter’s potential profit and pushed the company into the red.
Lee Auto faces brutal competition from BYD, Huawei’s IDO brand, and Xiaomi’s entry into the automotive market. Analysts downgraded the company, slashing price targets and forecasting a 10% sales decline through 2026. By January 2026, Lee Auto delivered only 27,668 vehicles, its eighth consecutive month of falling deliveries and its lowest volume since March 2025. The company is now offering rebates of 20,000 to 30,000 yuan per vehicle just to move inventory off dealer lots, eroding margins across the sales chain. Lee Auto has no current plans for North American expansion, and its future remains uncertain.
Xpeng’s volatility and pivot
Xpeng, known for its advanced driver‑assist technology, claimed a first quarterly profit in 2025, but the achievement was short‑lived. In January 2026, a new 5% purchase tax on new‑energy vehicles replaced the previous full exemption, hitting the industry hard. Xpeng’s vehicles, positioned in the most price‑sensitive segment, suffered the greatest impact. The company’s gross margins could not cover its R&D spending, which reached 2.43 billion yuan in Q3 2025—a 48.7% year‑over‑year increase—while the average selling price per vehicle declined.
Facing declining sales and mounting costs, Xpeng is pivoting from pure vehicle sales toward becoming a technology supplier, licensing its autonomous‑driving systems to other manufacturers. The shift signals an admission that selling cars alone is not sustainable. For buyers considering Xpeng’s potential arrival in North America, the question is whether to purchase from a company that is already pivoting away from its core business.
Zeer’s consolidation and the J empire’s restructuring
Zeer, a premium EV brand under the J group, delisted from the New York Stock Exchange in December 2025 after merging back into J Auto and abandoning its independent listing. The move followed months of concerns about Zeer’s viability as a standalone brand. Meanwhile, J’s other premium EV brand, Polestar, entered crisis mode with a going‑concern warning and a 95% stock collapse. J’s budget EV brand, Geometry, quietly disappeared, and Lincoln Co. was absorbed into Zeer. The parent company is consolidating resources across a dozen brands, a strategy that has not proven effective.
In August 2024, Zeer faced significant customer backlash after launching the 2025 model year of the Zeer 001 just six months after releasing the previous version. Customers who had bought the earlier model found their vehicle superseded by a newer version that could not be retrofitted. The CEO publicly apologized. According to Reuters and the China Securities Journal, many Zeer vehicles sold in Xiamen in December 2024 were pre‑registered with insurance under corporate affiliates before being sold to retail customers. Of 2,737 vehicles recorded as sold that month, only 271 were actually registered for license plates by real buyers.
For dealers and buyers alike, the pattern is clear: premium Chinese EV brands that once promised innovation are now grappling with financial distress, supply‑chain bottlenecks, and eroding dealer relationships. The story of Polestar, NIO, Lee Auto, Xpeng, and Zeer underscores the importance of scrutinizing a company’s financial health, dealer network, and long‑term viability before making a purchase or partnership. In a market where brands can collapse overnight, due diligence is not just prudent—it is essential.