Zotye Auto Investigated for Violating Disclosure Rules Amid Deepening Financial Crisis

[Corporate Oversight] Zotye Auto is under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure regulations.

Key Development: Delayed Disclosure of Debt Default Likely Primary Cause

The company was required to repay 30% of the principal for the third tranche of restructured debt on December 21, 2025, but did not announce this until January 27, 2026—a delay exceeding one month. On March 27, 2026, the Zhejiang branch of the CSRC issued a warning letter regarding this matter, holding accountable then-Chairman Li Lizhong, General Manager Han Biwen, and Secretary of the Board Wang Yian.

Key Metrics: Seven Consecutive Years of Losses Exceeding RMB 25 Billion

From 2019 to 2025, cumulative losses surpassed RMB 25 billion; in 2025, the company resumed production of only 1,208 vehicles, with sales totaling just 14 units. In Q1 2026, revenue stood at RMB 74.7619 million, down 24.29% year-over-year, with a quarterly loss of RMB 82.0099 million and a debt-to-asset ratio approaching 99%.

Strategic Context: Repeated Disclosure Violations Coupled with Deteriorating Operations

The company has previously been penalized multiple times for issues including accounting errors and inaccurate disclosures regarding concerted actions. This latest investigation may involve financial restatements or unresolved historical matters. Despite the investigation, the company stated that its operations continue normally.