The “Evergrande of Autos”? Decoding the Rumors and Reality Behind GAC AION’s Trust Crisis

A shocking rumor recently sent ripples of fear through the Chinese auto industry. The story claimed that GAC AION, a major EV brand, was “on the verge of implosion,” facing a massive employee stock repayment crisis that drew chilling parallels to the real estate giant Evergrande.

Compounded by GAC AION’s real-world challenges—a delayed IPO and a sharp decline in sales—the rumor quickly amplified market anxiety. GAC Group was forced to issue an immediate and forceful denial. From my perspective here in China, this entire episode serves as a stark stress test, revealing the intense pressures and fragility of trust in a market defined by brutal competition.

1. The Rumor Mill: What Was the “Evergrande of Autos” Accusation?

The core of the rumor was explosive. It alleged that during GAC AION’s 2022 push for an IPO, employees were pressured to invest an average of 2 million RMB (approx. $275,000) each, with the company even helping to arrange loans for these investments.

A five-year lock-up period was supposedly in place. But with the IPO failing to materialize by 2024, coupled with executive departures and employee pay cuts, the rumor claimed the company was now facing a “ticking time bomb.” The narrative was that as the June 2025 principal repayment deadline loomed, the company was about to “explode.”

This story gained traction because it aligned with GAC AION’s very real sales slump. After selling 480,000 units in 2023, sales plunged 21% to 374,000 in 2024. The decline has continued this year. This downturn, largely attributed to the saturation of the B2B ride-hailing market that once drove AION’s volume, created a fertile ground for fear and speculation.

2. GAC’s Official Response: Separating Fact from Fiction

On June 22, GAC Group fired back, unequivocally stating the story was a “malicious rumor with no basis in fact” and that they had reported it to the police. Feng Xingya, President of GAC Group, held a press conference to set the record straight on their employee stock ownership plan (ESOP).

• The Purpose of the ESOP: President Feng explained that the 2022 ESOP was designed to retain top talent and energize the organization amidst the EV boom. Its goal was not to raise capital, but to boost corporate vitality through shared ownership.

• The Investment & Lock-up: It’s true that employees invested approximately 1.8 billion RMB for a 4.55% stake in 2022. However, contrary to the rumors, all participants—from top executives to general staff—are subject to the same five-year lock-up period, which expires in 2027.

• Repayment and Withdrawal: If an employee leaves during the lock-up period, their shares are bought back based on the previous year’s net asset value. It is impossible, Feng emphasized, for executives to cash out early. He added that all participating employees are currently making their principal and interest payments without issue.

• GAC Group’s Financial Health: President Feng stressed that GAC Group has one of the strongest financial structures in the Chinese auto industry, with a debt-to-asset ratio of just 47.6% in 2024. This, he asserted, proves that neither GAC Group nor GAC AION is remotely close to being the “Evergrande of Autos.”

3. The Reality Behind the Rumor: A Market on Edge

While GAC’s clarification debunked the rumor, the fact that it could spread so quickly reveals a deeper truth about the current state of China’s NEV market. The anxiety is real, and it’s driven by the intense pressure of nèijuǎn (内卷)—a relentless, zero-sum internal competition.

• The Pressure of Nèijuǎn: The brutal price war in China is forcing many OEMs to sell cars at little to no profit. This creates widespread concern about the financial health of even major players, making the market highly sensitive to any negative news.

• The “Next Evergrande” Fear: The real financial struggles of some EV startups, like Nezha’s near-bankruptcy and NIO’s massive cumulative losses, have made the market hyper-aware that a major collapse is possible. While GAC AION has the backing of a state-owned giant, the market is still scrutinizing every company’s profitability and cash flow.

• The Importance of Trust & Transparency: This incident highlights how critical transparent communication is. When employee investments are tied directly to company performance, any ambiguity or lack of clarity can be a breeding ground for mistrust and damaging rumors.

Conclusion: A Stress Test Passed, But the Pressure Remains

The “Evergrande of Autos” rumor about GAC AION was false, but it serves as a powerful illustration of the volatility and intense pressure within the Chinese auto market today. Behind the “China Speed” and incredible innovation lies a parallel reality of financial strain and market distrust. This is a critical challenge that all Chinese automakers must navigate as they move forward. The trust of the market, it turns out, is a resource just as valuable as any battery or microchip.