Chinese electric vehicle start-up NIO is starting another round of layoff as its car sales have plummeted. Due to challenges of car quality, recalls, and dwindling sales, NIO will lay off 1,200 staff by the end of September. After that, its total number of employees will be around 7,500, Li Bin, founder, chairman and CEO of NIO, said in an internal email.
Li Bin said that from this year on, in order to ensure the company’s sustainable development, they must adjust their mindset and plans timely, control costs, improve operational efficiency, and put all the energy into core business. He revealed that he has clarified the organizational structure with department leaders in the past few weeks and made up the layoff decision, in order to ensure the company’s operational efficiency.
Earlier this month, NIO announced that a total of 837 new vehicles were delivered in July, down about 37.5% from the previous month. Among them, the number of ES8 deliveries was 164, down 67% year-on-year. At the beginning of the year, NIO set an annual sales target of 40,000 to 50,000 units. But as of now, it has delivered a total of only 8,379 units, only completing 20.95% of the minimum annual target.
Since April, NIO vehicles have experienced frequent spontaneous combustion incidents. Shortly after the Ministry of Industry and Information Technology issued the “Notice on Conducting the Investigation of Safety Hazards of New Energy Vehicles” in June, NIO took the initiative to file a recall plan.
NIO said that since June 27th, it will recall some of the NIO ES8 electric vehicles equipped with power battery packs produced between April 2, 2018 and October 19, 2018, for a total of 4,803. NIO has delivered a total of 19,727 vehicles as of July 2019, and this recall will affect 24% of its total delivered vehicles.
This is already the second round of layoff confirmed by NIO this year. Earlier in March, Li Bin issued an internal email acknowledging that there was some personnel redundancy during rapid development in the past. The company planned a 3% layoff in the first half of the year to control the total number of employees within 9,500.
Lin also indicated three goals of 2019 – to complete the annual user development plan, improve operational efficiency significantly, and complete the launch of the second-generation platform NP2.
NIO is facing a series of problems. According to the financial report, the company has lost RMB17.23 billion (US$2.43 billion) in the past three years. After the plan of building its own factory shelved, the company faced huge financial pressure and chose to sell the electric formula fleet to gain time.
NIO’s share price also continued to fall since its listing last year, due to the demand crisis and several negative events such as spontaneous combustion of batteries
