Nio, an electric car manufacturer based out of China, recently announced a new fundraising effort by issuing around $200 million worth of bonds. The company also announced that they would be increasing their efforts to cut costs and look for more investors as the market slows. Nio has seen some losses increase as the company tries to lead the Chinese market as other electric car companies like Tesla also make their attempts.
Even with all this competition, all of these companies are being slowed by the shrinking demand within China, fewer government subsidies for electric cars, and continuing worries about the United States-Chinese trade war. Nio even recently delayed its financial earnings call before announcing a $478.6 million during the second quarter and an 8% drop in revenue. This also follows a vehicle recall that hit Nio back in June which also effected their overall financial picture during the second quarter.
The company also announced that it had sold fewer cars when compared to the first quarter. Nio's Head of Finance, Nick Wang, stated that the company's gross margins "will still be negative for the rest of the year.”
Tung-June Hsieh, the company's Chief Financial Officer, also stated that the company is making “significant, positive progress” in raising funds but didn't go into any details.
Earlier this year, Nio signed an agreement with a Chinese government-backed fund to increase investment to around $1.5 billion. The company also announced a $200 million private investment in convertible notes divided evenly between Tencent and company Founder Li. According to the recent report, the company has around $500 million cash on hand.
In order to cope with these expanded losses, Nio is growing its sales network by adding Nio Spaces, a series of smaller showrooms. The company hopes these "spaces" will allow them to reach more consumers within the market while saving money. Nio hopes to have around 200 of their Nio Spaces up in running within 100 cities around China.
The company hopes to encourage other growth by focusing on regional promotions, launching a car subscription service, and looking into selling cars to companies and fleet managers.
Nio reduced its workforce from 9,900 to 7,800 at the beginning of the year and expects to see more employee losses by the end of the year through business unit spin-offs and restructuring.
Nio still leads electric vehicle companies within China and was first among the Chinese companies to expand internationally. Last year the company fundraised $1 billion and had an IPO that valued the company at $6.4 billion.
Read more here
Join us November 12-15 for the Property Portal Watch Conference Madrid 2019.