Chinese EV maker Nio may undertake more job cuts after the company announced plans to cut 10% of its workforce last month. The company’s founder and chief executive, William Li, said in an internal letter that reducing staff is necessary as the company faces fierce competition in the world’s largest electric vehicle (EV) market. “I will focus on improving resource efficiency, cutting projects that do not contribute to financial performance in three years, and ensuring core products are released on time,” Li wrote.
Nio’s sales in the US, a country that many Chinese carmakers have long eyed as an opportunity for growth, have been lackluster this year. Although the company has cut prices on its first mass-market EV, the Tesla Model X, Rivaling the ES8, it is still out of the range of most would-be buyers. Last month, the company sold just 164 ES8s in the US, according to industry site Gasgoo.
The company is also facing rising competition from plug-in hybrids that offer better fuel economy and are less expensive to operate than pure EVs. In the first nine months of this year, sales of such vehicles rose 84.5% compared to 2016, benefiting car makers like BYD and Li Auto that sell such vehicles.
These factors are taking a toll on the company, the smallest of the three major Chinese EV manufacturers trading in New York. During October, Nio’s primary rivals, XPeng and Li Auto, each reported higher deliveries than the company.
Despite the challenges, Nio’s stock price is still trading higher than in September, when it dropped more than 20% after the company raised $1 billion in a dilutive convertible bond offering. After announcing a partnership with Mobileye, Intel’s autonomous driving arm, investors have reassessed the company’s prospects.
However, whether this will be enough to turn around the company’s fortunes is unclear. Investors will likely continue to weigh the company’s prospects as it works to improve its financial performance and compete in a rapidly changing market landscape. If Nio cannot improve its financial results, more layoffs will likely be necessary, which could further hurt the company’s shares. As such, the company’s shares are unlikely to rise significantly soon.