Japanese automotive manufacturer Toyota is reportedly exploring the possibility of acquiring Neta Auto, a Chinese electric vehicle company facing severe financial distress, reported by Car News China. The potential deal, though not confirmed by Toyota, was highlighted in a report by Kuai Technology on 12 May, suggesting that such a move could serve to strengthen Toyota’s electric vehicle strategy in China, the world’s most competitive EV market.
Neta Auto, operated by Hozon New Energy Auto and founded in 2014, has been in crisis since the middle of 2024. The company halted production and implemented mass layoffs, while simultaneously scrambling to secure outside investment. In February this year, a much-anticipated Series E financing round failed. This round was projected to raise between 4 billion and 4.5 billion yuan (approximately USD 552–621 million), with the bulk of funding—3 billion yuan (USD 414 million)—expected from a lead investor associated with a BRICS country fund. However, the investment was conditional upon the company restarting production and attracting additional matching funds, neither of which came to fruition, prompting the investor to withdraw and causing the financing effort to collapse.
Although Neta attempted to restart operations by briefly reopening its Tongxiang facility in January, a shortage of essential components prevented production from resuming. This setback had a domino effect, undermining investor confidence and leading to a dramatic decline in the company’s valuation.
In 2023, Neta was valued at 42.3 billion yuan (USD 5.8 billion) following a 1.53 billion yuan (USD 211 million) investment from a government-linked entity in Tongxiang. By early 2025, however, the company proposed selling a 50 per cent stake for just 3 billion yuan (USD 414 million), reducing its valuation to 6 billion yuan (USD 828 million)—a staggering 80 per cent decrease. This valuation plunge angered early and state-backed investors, including 360 Security Technology. The company’s founder, Zhou Hongyi, withdrew a previously committed follow-up investment of USD 138 million in response to the decline and the company’s deteriorating leadership credibility.
Financial records indicate that Neta has reported cumulative losses of 18.3 billion yuan (USD 2.53 billion) over the past three years. The firm also owes around 6 billion yuan (USD 828 million) to its suppliers. In an attempt to stave off collapse, Neta proposed converting 70 per cent of its supplier debt into equity and paying the remainder in instalments. The company further warned that, without fresh capital, it may default on employee wages and social insurance contributions. In the event of bankruptcy, government-linked investors are expected to take repayment priority, potentially leaving suppliers exposed to major losses.
The company’s situation is further complicated by its obligations in Thailand. Neta previously received subsidies of up to 150,000 baht (USD 4,100) per vehicle under government incentive schemes. However, to retain these incentives, the company is required to meet local production targets by 2025. A failure to do so could force Neta to repay the subsidies in full, including interest and any associated tax breaks.
Despite the turmoil, Neta continues to hold some residual market and technological value. In March, it reached a debt-for-equity agreement worth 2 billion yuan (USD 276 million) with 134 of its key suppliers. Additional financial backing was also secured from institutions in Thailand and from Solotech, a Hong Kong-based firm.
Should Toyota proceed with a buyout, it could gain access to Neta’s local supply chain infrastructure, intellectual property, and market presence—factors that could accelerate the Japanese automaker’s efforts to expand its EV portfolio in China. Analysts have noted that this strategic opportunity could provide Toyota with a platform to compete more effectively against dominant local players, such as BYD.
Toyota, however, has denied the reports. The brand’s communications division in China has stated that there has been no official information regarding such a plan, effectively distancing the company from the acquisition speculation.
Neta’s recent sales figures reflect the depth of its crisis. The company delivered 64,500 vehicles in 2024, a sharp decline, followed by an even more dramatic collapse in January 2025, when monthly sales fell by nearly 98 per cent to just 110 units. Its product line has been criticised for relying on outdated technology and for making questionable performance claims. A widely shared video of founder Fang Yunzhou bowing in apology to suppliers and dealers has gone viral, symbolising the brand’s deepening troubles.
While Neta still possesses certain strategic assets that may interest global automakers, the company’s future remains uncertain. If Toyota ultimately declines to intervene, Neta may be left with few options to avoid bankruptcy.
