Chinese electric vehicle maker Nio is reportedly cutting up to 40% of employees on its payroll focused on the research and development and marketing teams, while it will also sell its Formula E team as it deals with a liquidity crisis.
Why it matters: Nio has taken a series of measures to keep itself afloat and secured RMB 10 billion ($1.5 billion) in funding from a state-owned investor after it reported a sequential revenue decline and falling deliveries in the first quarter.
- The troubled EV startup was also hit hard by several battery fires related to its first commercial model, the ES8 SUV. It issued a massive recall to swap out battery packs on over 4,800 affected vehicles in late June.
- The company expects a further 20-30% quarter-on-quarter drop in revenue for the second quarter.
A Nio spokesperson on Friday night denied that it is cutting 40% of its staff. The company declined to comment further. Nio President Qin Lihong responded to Chinese media outlet 36Kr by saying the mass layoff reports were untrue, though the company is undergoing a round of restructuring to “improve business efficiency.”
Details: The reported job cuts affect a number of divisions including domestic R&D and marketing, as well as overseas units.
- Some departments have already seen 30% cuts in staff and the total number of employees has fallen 14% to 8,400 roughly.
- The company downsized its overseas footprint in April, cutting 70 employees from its two Silicon Valley offices and one of the two offices in San Francisco was closed.
- It recently sold its Formula E team Nio, formerly known as NextEV, to Shanghai-based racing company Lisheng to recoup funds. Nio made its name by winning the FIA Formula E championship in its debut season in 2015.
Context: The Chinese electric vehicle market is facing the start of a new era of competition as Tesla’s Shanghai gigafatory is nearly complete.
- The US EV giant said last week that it is on track to begin Model 3 production in Shanghai by the end of this year. Made-in-China Tesla models could be at least 50% cheaper than those made in the US.
- Nio has suffered a net loss of over RMB 20 billion since it started up in 2016, while deliveries more than halved in two consecutive quarters to hit 3,553 units at the end of June.
This article has been updated to include comment from Nio