Neta Faces Potential Bankruptcy as Toyota Acquisition Rumours Snubbed

With the acquisition rumours by Toyota being snubbed, Neta Auto could potentially face bankruptcy amidst its financial crisis.

Chinese EV marque Neta Auto could face potential bankruptcy, with CarNewsChina reporting that new court filings suggest the automaker file for bankruptcy proceedings after months of financial turmoil. This revelation comes after talks of a potential acquisition by Toyota were initially rumoured, before both companies debunked them.

Head of Brand Communication at Toyota Motor China, Xu Yiming, has explicitly rejected this speculation about a potential takeover of Neta Auto. When contacted by CarNewsChina, the Toyota China spokesperson said, “We have never heard of this matter and ask for help in clarifying this rumour.”

With this acquisition rumour debunked, Neta now faces a potential bankruptcy, with court records revealing that its parent company—Hozon New Energy Automobile Co. Ltd.—is now facing a bankruptcy review case. China’s bankruptcy information platform showed that Neta’s bankruptcy case was filed by Shanghai Yuxing Advertising Co. Ltd., and the case is now being processed by the Intermediate People’s Court of Jiaxing City in Zhejiang Province.

Prior to this bankruptcy case, Neta had been actively seeking new funding to address its operational difficulties and settle outstanding debts owed to several of its suppliers. Early in Jan 2025, the company held a shareholder meeting to discuss a potential Series E funding, where it was forecasted to raise approximately CNY 4 billion (RM2.39 billion), with the lead investor contributing about CNY 3 billion (RM1.79 billion) up front.

Said investment was scheduled to arrive sometime in April this year, where it will be primarily used to restore production and fund future development. However, sources within Neta Auto confirm to CarNewsChina that as of May 2025, these funds are still not available.

Under Chinese bankruptcy law, the process typically begins with a pre-reorganisation application or a formal bankruptcy filing. Once a creditor files for bankruptcy liquidation, the court must notify the debtor company within five days. After then, the debtor has seven days to oppose the filing. Within six months of the court's decision to start the bankruptcy filing, the debtor or designated administrator must present a draft of the plan to the court and the creditor meetings.