Ideal Motors layoffs have reversed. Recently, Ideal Motors is recalling some key positions that were previously laid off. Ideal Motors did not respond to the request for verification. However, it was confirmed by several employees on a workplace social platform. Experts believe that the layoffs followed by recalls are unexpected events. Ideal Motors had set a target of selling 800,000 vehicles this year, but due to market pressures and internal development issues, the company found that its development pace did not meet expectations. To address the issues, Ideal Motors attempted to make changes through organizational restructuring and layoffs. Layoff rumors started circulating in May, with the human resources department being the first to make cuts. Other departments such as design, production, and supply chain also experienced varying levels of adjustments. Reports suggest that the layoffs may be around 18%, affecting 5,600 employees, or even up to 10,000 employees. Ideal Motors has not commented on the exact numbers. It is worth mentioning that Ideal Motors’ workforce was initially set based on the target of selling 800,000 vehicles. Many employees in the autonomous driving department were recruited from other companies with high salaries in October last year, with some experiencing salary increases of over 50%. The layoffs in May are seen as a consequence of this aggressive expansion goal.
The report cited Ideal Auto R&D personnel as saying that some laid-off employees have received notices to return for compensation negotiations. The compensation will not be provided to those recalled. The contracts of recalled employees will continue. The scale and departmental proportions of the recall are still unclear. After news of Ideal Auto recalling some laid-off employees emerged, industry opinions were mixed. Some believe that for the laid-off employees, this is an opportunity to return to their jobs. For Ideal Auto, recalling laid-off employees may help maintain team stability and continuity, as well as save costs and time on rehiring and training new staff. According to Jixue Hong, Director of the Automotive Industry Innovation Research Center at Northern Industrial University, the “lay off then recall” incident is a sudden event that may have some setbacks and minor issues. It is a normal experience for a company to adjust and correct its strategies and execution in order to grow through such reflections. In Jixue Hong’s view, the appearance of the “lay off then recall” incident at Ideal Auto reflects the intense competition in the current industry. Achieving success at a certain stage does not guarantee continuous success. Companies need to constantly adjust and correct themselves in order to truly survive and grow in the market. Product release rhythm adjusted In fact, since entering 2024, Ideal Auto has made numerous adjustments to adapt to the industry environment and its own development. These adjustments reflect Ideal Auto’s anticipation of future business development through layoffs and structural adjustments. On the product side, Ideal Auto has postponed the release of the pure electric SUV originally scheduled for the second half of this year to the first half of next year. Ideal Auto’s Chairman and CEO Li Xiang explained, “The number of self-operated supercharging piles has not reached a scale that can be met, and the number of store booths cannot support such a large product system, otherwise there may be a problem of increasing the number of products without increasing sales.” As for the delay in the release of pure electric products, some Ideal Auto employees believe that the main reason is that the market has rejected the design language of MEGA, and the 3 pure electric vehicles developed on the same platform as MEGA have inevitably been affected. In addition, the current pure electric vehicle track is very competitive, and Ideal Auto’s existing solutions do not have sufficient competitive advantages, so they need to re-polish their products. After adjusting the product release rhythm, Ideal Auto also lowered its sales expectations for this year. In February of this year, Li Xiang said, “2024 will be an unprecedented year of great products for Ideal Auto.” With the support of richer products, stronger product strength, and more efficient production and supply system, we will challenge to deliver 800,000 vehicles per year and achieve the goal of becoming the top luxury car brand in the Chinese market.
However, just over a month later, Ideal Car adjusted its annual sales target to “increase by 50% to 70% based on 2023 sales”, which is 560,000 to 640,000 vehicles. According to recent reports from Auto Evening, Ideal Car hopes to achieve monthly sales of 50,000 vehicles in the second half of this year. Ideal Car declined to comment on this. Based on this data, Ideal Car’s annual sales are estimated at around 480,000 vehicles, a 27.6% increase from the same period last year. Despite a lower year-on-year growth rate compared to 182.2% in 2023, Ideal Car faces tough competition from strong brands like Hongmeng Zhihang launching new or redesigned models. Some believe that if Ideal Car achieves nationwide autonomous driving in the third quarter of this year, it will increase product value, visibility, and ultimately boost sales. Although Ideal Car has laid off employees in the autonomous driving department, autonomous driving remains a key focus for the company. “In addition, it is important to consider whether Ideal Car has the ability to continuously define and innovate its products. With the development of intelligent connected new energy vehicles, it is becoming increasingly difficult for companies to make significant or widespread product innovations. Breaking through oneself is particularly challenging for any company. It is crucial for Ideal Car to leverage its established brand momentum to strengthen its system, address its weaknesses, and establish stable product output and management capabilities to ensure sustained sales and user recognition,” said Ji Xuehong.