Nio shifts electric vehicle plans as losses pile up

Chinese automotive startup Nio is tweaking its strategies for electric vehicles, a move prompted by sales of its ES8 model.

Nio, which reported in its unaudited financial results Tuesday that a reduction of $390.9 million in the first quarter, will be currently taking a variety of measures in reaction to a downturn in earnings. These changes include a shift in its vehicle production plans, a reduction in R&D spending plus a 4.5percent cut to its workforce, the organization ’s creator and CEO William Li said during a sales forecast.

The fall in sales is mainly driven by the EV subsidy reduction in China and macroeconomic trends in the country which have been exacerbated by the U.S.-China trade warfare, Li explained.

Nio shares still closed 3.6percent higher Tuesday (and had popped as high as 7 percent ) since the results still beat Wall Street’s expectations.

Nio started deliveries of the ES8, a seven-seater high-performance electrical SUV, in China in June 2018. And while deliveries originally surpassed expectations, they have slowed in 2019. Nio reported that it delivered 3,989 ES8 electrical SUVs from the first quarter, a fall from the prior period.

Li suggested that the ES6, a more affordable SUV which will come to market next month, can be cannibalizing ES8 sales.

Meanwhile, Nio has changed its plan . Rather than bringing its next-generation ET7 the automaker will instead concentrate under its ES show lineup.

“Looking forward to the next quarter, we anticipate a much more challenging sales environment and anticipate overall demand and deliveries to reduce, as competition continues to quicken and the overall automobile market in China remains muted. Against this background, Nio is focusing on rolling out our ES6 nationally, and at exactly the identical time, improving overall network usage and operating efficiencies,” Nio CFO Louis T. Hsieh said in an declaration.

Nio showcased a preview edition of the ET7 during rsquo or two a month;s Shanghai Auto Show. The automaker has said that it will look and create the ET series using a new next-generation system 2.0 (NP2) which will feature Level 4 autonomous driving capabilities, a designation by SAE which means each the driving is managed by the vehicle under certain conditions.

The launch timeline of the ET series will mostly hinge on just how Nio’s joint venture with Beijing E-Town International Investment and Development unfolds. Under the joint venture, Beijing E-Town International Investment and Development will invest 10 billion yuan ($1.45 billion) and will encourage a new factory for its NP2 stage vehicles, Reuters reported. The business explained the parties are still working toward a binding definitive agreement on the investment.

As those discussions shake Nio plans to “leverage the stage technology out of the ES8 and ES6 to make a design design. ” This third party car version attached to the ES8 and ES6 stage is anticipated to launch in 2020.

The business has high hopes for its nearer-term ES6. The business has 12,000 pre-orders for its ES6; some 5,000 of these were added in the five months since the Shanghai Auto Show. The first deliveries of the SUV will begin in June.

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