Chinese start-up Nio Inc plans to cut more job cuts as the electric carmaker continues to struggle with low demand, according to local reports.
The company, which was listed on the US Nasdaq stock exchange last September, said it planned to cut around 1,200 jobs from a total workforce of 7,500 people by September of this year as it looks to reduce its cash-burn and improve operational efficiency.
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China's electric vehicle market this year has not grown as quickly as many had anticipated and actually shrank year-on-year in July, despite minimum sales quotas for the year. Total new-energy vehicle sales in the country, comprising mostly electric vehicles, were still up by was almost 50% higher at 699,000 units in the first seven months of 2019, however.
Nio delivered just 8,379 vehicles in the seven-month period, or just 21%of its minimum sales target of 40,000 vehicles for 2019. The company posted a net loss of CNY2.62bn (US$370m) in the first quarter of this year, 71% more than the loss it incurred in the same period of last year, while revenues declined by 54% to CNY1.63bn (US$230m).
The redundancies will mainly affect white collar staff such as human resources, legal affairs, finance and other operational support departments, and not R&D and user services which the automaker sees as core operations.
The redundancies follow the company's decision announced in March to scrap plans to build its own car plant in Shanghai and continue to depend instead on its contract-manufacturing partnership with state-owned JAC Motors.
At the time, Nio pointed out that JAC's assembly plant in Hefei in Anhui province has enough capacity and flexibility to support its medium-term growth plans, adding that production will remain at the current location at least for the next two/three years.
Nio founder William Li last week said "the internal and external environment of the company has changed a lot in the last six months. To ensure the survival and development of the company, we have to adjust our plans and focus on the development of the core businesses".
