Modern vehicles can no longer simply be dubbed “smartphones on wheels.” Their functionality is intricately tied to a “living infrastructure,” where the seamless operation of software depends on active servers and applications. This reliance becomes a significant issue when an automaker goes bankrupt and halts operations, as car owners often find themselves facing unexpected challenges.

Image source: WM Motor

A prime example of this can be seen with WM Motor, a Chinese automaker that filed for bankruptcy in October last year. One owner of the brand’s EX5 electric vehicle discovered that the associated smartphone app, which had allowed remote control of charging and climate settings, suddenly stopped working. Even the dashboard display lost critical information like mileage and battery charge levels.

Other owners of WM Motor’s electric vehicles reported that digital radio, which streamed content via the internet, also ceased to function. The overall in-car multimedia experience degraded following the company’s bankruptcy. Although WM Motor’s servers were temporarily restored, the on-board software no longer received updates, and the mobile app vanished from Chinese app stores. This left car owners dependent on previously installed versions of the app, which, while still functional, might not be reliable long-term.

China’s electric vehicle market is vast, with over a hundred manufacturers, yet more than 20 companies have exited the market since 2020. The case of HiPhi, a futuristic electric car maker that managed to sell only 4,520 vehicles in 2022 before suspending production in February, highlights the volatility of the industry. WM Motor, on the other hand, sold around 100,000 cars between 2019 and 2022, leaving roughly 160,000 owners of electric vehicles from bankrupt brands, according to the China Association of Automobile Dealers. These owners increasingly have to rely on the used parts market, as bankrupt manufacturers cease the production of new components.

Chinese laws mandate that automakers provide spare parts for ten years, but this doesn’t cover the crucial aspect of software support. With electric vehicles being heavily dependent on software, the lack of legal obligations for automakers to maintain this software leaves car owners in a precarious position. Experts argue that modern vehicles cannot function without complex, regularly updated software, making the fallout from bankruptcies particularly challenging for consumers. This issue isn’t confined to Chinese automakers, as startups in other countries face similar risks. However, electric vehicle owners whose brands are backed by substantial investors are better protected, as these investors can maintain after-sales support even if the manufacturer fails. Consequently, consumers are increasingly cautious, gravitating towards established brands that are perceived as less likely to go bankrupt.

Source: Rest of the World

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