BEIJING (Reuters) – Nio Inc., one of China’s high-profile electric car start-ups, delivered in a fresh fund-raising push this week to say it had issued a $200 million bond and had to speed up cost-effective programs to slow the cash burn as the company seeks to attract more investors, in a falling market.
FILE PHOTO: a Chinese electric-car start-up, NIO, Inc. the vehicle was parked in front of the New York Stock Exchange (NYSE) to celebrate the company’s initial public offering (IPO) in New York, New York, united states of america, September 12, 2018. REUTERS/Brendan McDermid
Loss for Nio, it is one of the most notable among the dozens of Chinese electric-car startups will compete to become the next Tesla, Inc. All of them are constrained by the decline in demand in the world’s largest auto market, and less government subsidies for EVs and the continued concern about the China-U.S. trade war.
In an unusual move, Nio canceled a scheduled earnings conference call on Tuesday. However, the opposition of the phone call on the Wednesday following the end of the voting shares of the company touched a low of $1.97.
The company reported a second-quarter net loss of $478.6 million, up 25.2% compared to the first quarter loss, after the removal of the 4,803 vehicles in the month of June.
Nio’s sales were down by 8 per cent to 1.41 billion yuan ($198.40 million) from 1.54 billion yuan in the previous quarter. Nio is sold 3,140 ES8 cars, from 3,989 in the first quarter of the year. It is sold only 413 of cheap ES6 model.
Nick Wang, Nio to Group head of finance, said that the company’s gross margins “will still be negative for the remainder of the year.” But, as the Chief executive Officer (ceo) Tang-June, Hsieh said the Nio has made “significant positive progress” in its latest fundraising, without providing details.
In May, Nio entered into an agreement with a government-backed fund, made an investment of approximately $1.5 billion.
Nio also announced a $200 million private placement of convertible bonds, to be equally divided among the first investors in Tencent Holdings, and founder of the Li. Nio, had $503.4 million in cash on its balance sheet as of 30 June.
CASH TO BURN
In order to help you deal with the cash to burn, Nio has been the expansion of its sales network, with a smaller showroom, called Nio Spaces non-smoking, according to Hsieh.
Nio Spaces that will allow us to quickly, cost-effectively and in a meaningful increase in the number of retail outlets in the market,” Hsieh said. “By the end of 2019, our goal is to be well-established about 200 Nio Spaces non-smoking, in more than 100 cities in China.”
Nio will also be the promotion of a more regionally-driven promotion, the use of a vehicle, a subscription program, and then press the the sale of business users and fleet managers.
After the reduction of the workforce to be around 7,800 by the end of the third quarter, from about 9,900 in October, Nio plans to further reduce the number of employees at the end of this year, through a process of restructuring and spinning off a number of business units, Hsieh said.
Nationally, sales of new energy vehicles, including EVs, were contracted for the second month in a row in August, according to the China Association of Automobile Manufacturers.
Nio led a pack of the EV start-ups, and it was one of the first internationally acknowledged. It is composed by Tencent, and investor, Hillhouse Capital Management is among its shareholders and raised a $1 billion last year in an initial public offering that valued it at about $6.4 billion. However, bankers said the Chinese EV makers face the increasingly difficult to finance the efforts to fight for attention in a crowded industry.
Reporting Yilei Sun in Beijing; Editing by Tom Brown