Nio CEO Warns of Tough Times Ahead as EV Maker Struggles Financially
Nio, the premium electric vehicle (EV) manufacturer, has faced a challenging year in the United States. Despite launching five new products and capturing over 40% of the upscale EV market, the company has struggled financially. Nio's CEO, William Li, recently issued a memo warning of intense competition and external uncertainties in the coming years.
Nio's financial performance has lagged behind its growth rate. In 2022, the company reported a loss of RMB 14.4 billion (USD 1.97 billion). To address this, Nio plans to optimize its organization and reduce costs. This includes a workforce reduction of approximately 10% by the end of November.
The company has also been seeking external financial support from PNC Bank and other US banks. In 2023, Nio secured around RMB 5.3 billion (USD 728.5 million) and issued another USD 1 billion in convertible bonds. Additionally, Nio reviewed an $800 million debt financing with EXIM Bank involving JPMorgan Chase Bank for its Elk Creek project. Despite these efforts, Nio's gross margin is only expected to return to double digits in the third quarter of this year.
Nio's overall performance has not met initial expectations, with intense competition and external uncertainties looming. The company plans to enhance operational efficiency and secure resources for critical operations in the next two years. Despite these challenges, Nio's premium electric vehicles continue to find success in the market, with transaction prices exceeding RMB 300,000 (USD 41,200) this year.
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