Shares of Chinese startups Nio Inc. fell amid disappointing financial results for the second quarter of this year. The company holds an emergency restructuring the business and reducing staff, but without additional capital it will not survive – their is enough money for a couple of weeks.
The Company Nio Inc. was founded in 2014 and compared to dozens of other ambitious Chinese start-UPS who want to get rich in the production of premium electric vehicles, looked very promising. While most competitors are only planning to enter the market in the next decade, the Nio in the middle of last year, launched in the Chinese market electric crossover ES8. The car has an attractive design and decent specifications (four-wheel drive, 653 HP, 355 miles on a single charge), but buying a domestic miracle machine, the Chinese reluctantly from July to December last year, 12 sold 807 copies, and in the first half of 2019, the only 6690.
Guide Nio explains the almost twofold decrease in demand for its first mass model of the deceleration of the Chinese economy, a total collapse in the Chinese new car market, reduction of state subsidies for buying electric vehicles and a trade war between the US and China, which collapsed sales of cars of premium and luxury segments.
We’re problem seems different: the minimum price for Nio ES8 is 448 million yuan ($62 600), while the Tesla Model 3 with a range of 460 km will cost Chinese consumers to 328 million yuan ($45 900). Such a pricing policy to achieve success is difficult, almost impossible.
In may, the Nio released a more affordable crossover ES6, but for two months (may, June) sold a total of 791 instance. Is ES6 from 358 thousand yuan ($50 100), that is still very expensive. In addition, in June the company was forced to withdraw 4803 car because of the risk of spontaneous combustion that badly stained the reputation of the brand Nio.
The result is natural and sad. In the second quarter of this year the company’s losses, according to Reuters, amounted to 478,6 million dollars, which is 25% higher losses of the first quarter. Total losses accumulated since 2014, has reached $ 6 billion. Publication of the report caused a further drop in the value of shares in Nio Inc. on the new York stock exchange, on which the Chinese company was released in September of last year. At the start of the placement, the investors were given a 9.9 dollars per share, the peak price recorded in March 2019 ($10.06), and then began a rapid decline. By mid-September the price per share has decreased to 3.21 dollars, and today has fallen to 1.75 per dollar. The pace of the action Nio will soon turn into plain wrappers.
Net sales in the second quarter of this year amounted to only 198,4 million dollars, 8% less than in the first quarter. Financial analysts believe that with the current amount of liquidity the company will last only a couple of weeks, after which she will have nothing to pay the bills. It is possible that will throw some money to the holding company Tencent initially supported the Nio, but Nio management must convince investors that the chances of survival are.
At the moment the Nio completes the planned reduction of staff from 9900 to 7,800 people, and then announced new layoffs. However, the company intends to invest in the network is small, intimate (area of less than 200 m2) of showrooms Nio Spaces, relatively inexpensive and quickly organize by the end of this year should see 200 such retail outlets, which will cover more than a hundred Chinese cities. Coupled with the leasing programs and subscriptions that should spur sales. On international markets, apparently, is not necessary to speak.
Meanwhile, the Nio spent a lot of money on a prestige project EP9 – electric hypercar with a capacity of one megawatt (1360 HP), which was the fastest serial electric car Nurburgring: he passed the legendary track in 6 min 46 s. Alas, the serial status of “Chinese” is in doubt – was allegedly issued 10 copies, but on sale they were never seen again. The machine lit up in popular car shows like the Grand Tour and increased brand awareness Nio, but to monetize her company failed, that is a PR project only increased the losses.
For other brands of electric potential collapse of the Nio is an alarming symptom: it is clear that expensive “train” from China few people are interested even in the presence of high-quality design and engineering. In the United States and Europe startups now so that other followers I Tumberg recognize that the electric car market got overheated already in the initial phase of its development – the myth of global warming can bury not one automobile Corporation and, as a consequence, cause a new crisis in the global economy. On the background of Nio, no one will remember.