Nio Inc. announced last week, it would open smaller showrooms for better sales network, cut jobs and spin off some business units after reporting a second-quarter loss of US$478.6 million, 25 per cent more than its first-quarter loss. The move was decided to control massive cash crunch amid slowing electric vehicle sales in China after the subsidy cut.
The company recalled 4,803 vehicles in June. The Chinese EV startup that was aiming to be Tesla’s counterpart reported an 8 per cent drop in revenue to 1.41 billion yuan (US$198.40 million) from 1.54 billion yuan in the preceding quarter.
William Li, founder and chief executive of Nio attributed the drop to reduced EV subsidies and incentives, and slumping luxury vehicle demand amid U.S. China trade tensions by the EV maker.
Nick Wang, Nio Group's head of finance, said the company's gross margins "will still be negative for the rest of the year."
Nio had $503.4 million in cash on the balance sheet as of June 30. Nio is expanding its sales network with smaller showrooms called Nio Spaces.
"Nio Spaces, which are normally less than 200 square meters, will allow us to quickly, cost-effectively and meaningfully increase the number of sale points in the market," said Tung-June Hsieh, Nio's CFO.
Nio will also encourage more regionally driven promotion, introduce a vehicle subscription program and push sales to corporate users and fleet operators. Nio already reduced manpower to around 7,800 by the end of the third quarter from over 9,900 in January. The company plans further job cuts and restructuring by the end of 2019. Hsieh said the company will be spinning off some business units.
New energy vehicles sales, including EVs, contracted for the second month in a row in August, according to the China Association of Automobile Manufacturers.
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