NIO CEO: 10% Position Cut by End of the Month
On November 2nd, an image started to circulate on the Chinese internet, which revealed that Chinese EV maker NIO would initiate layoffs with departmental proportions ranging from 10% to 20%.
In response, the company stated late in the day that “Pursuing continuous improvement in organizational efficiency has always been our ongoing effort at NIO. The rumors are untrue.” However, on Friday, in a memo addressed to all staff in the company, NIO CEO Li Bin mentions that the company plans to reduce approximately 10% of positions, and the specific adjustments will be completed in November.
An industry insider commented, cited by Chinese media IT Home that NIO had begun making related adjustments at the beginning of this year, which also involved organizational structure, and “personnel changes are inevitable.”
The layoffs at NIO may be related to NIO‘s sales and various pressures from all aspects of investment.
Data shows that in October, NIO delivered 16,074 new cars, a month-on-month increase of 2.77% and a year-on-year increase of 59.84%, lagging behind its competitors Li Auto and Xpeng. It is worth noting that both Li Auto and Xpeng set new monthly delivery records in October, putting NIO under considerable pressure. As of the end of October, NIO had delivered a total of 126,067 vehicles, representing a year-on-year increase of 36.30%. Although its annual sales lead Xpeng, there is a significant difference compared with Li Auto.
In terms of operations, NIO‘s total revenue for the first half of 2023 was 19.448 billion yuan, a year-on-year decrease of 3.74%; the gross profit margin was 1.28%, and the automotive gross profit margin was 5.57%. However, NIO‘s losses are severe, with a net loss of 109.26%, a year-on-year increase of 139.08%, higher than its two counterparts, Xpeng and Li Auto.
This could be related to NIO‘s R&D expenditure. Financial data shows that NIO‘s R&D expenditure in the first half of the year was 6.42 billion yuan, accounting for 33.0% of revenue, much higher that other two companies.
With the transformation of China’s domestic car market, marked by the so-called electrification pattern, the competition in the new energy track is particularly fierce. Under this backdrop, several car manufacturers have chosen to lay off staff to save costs. This year, NIO began to lay out R&D investments in various aspects such as mobile phones and batteries. On September 21, at the 2023 NIO Innovation Technology Day, the company launched its first smartphone model. As for why NIO wants to make mobile phones, CEO Li Bin explained, “It’s not because mobile phone companies are making cars, nor because NIO is not making money from cars and wants to profit from mobile phones, but because NIO users need a mobile phone that seamlessly connects with NIO cars.”
SEE ALSO: NIO’s Second Advanced Manufacturing Base Is Open to the Public
