China’s NIO to slash global staff by 20%

Bloomberg

NIO Inc reported a worse-than-expected quarterly loss, prompting the struggling Chinese electric-vehicle maker to pursue thousands of job cuts by the end of this month and the spinoff of some businesses by year-end.
Second-quarter net losses widened 83 percent from a year earlier to about 3.3 billion yuan ($463 million), according to a statement on Tuesday.
The figures were worse than the 2.6 billion yuan average estimate of two analysts surveyed by Bloomberg and it was the Shanghai-based company’s second-largest quarterly deficit based on available data stretching back to 2017.
The results help illustrate why cost overruns, weak sales, and major recalls have led NIO shares to fall 77 percent since its market value hit a record $11.9 billion about a year ago. More broadly, the company’s reversal of fortune illustrates why concerns are mounting that China created an electric-vehicle bubble that may be about to burst.
“People are wondering whether the company can continue to survive,” said Jason Chen, an analyst from Blue Lotus Capital Advisors Ltd. “Not many people care about delivery figures anymore.”
NIO shares fell as much as 12 percent to $2.38 in pre-market trading in New York on Tuesday. The company, which is backed by technology giant Tencent Holdings Ltd, has accumulated about $6 billion in losses since it was founded by William Li in 2014. Fire risks led to a mass recall of nearly 5,000 vehicles in June, a significant portion of the total 17,550 the company had ever sold as of the end of May.