Days ago, we learned Nio's co-founder Jack Cheng had announced his retirement from the company. Now, it appears there are more shakeups in store for the electric-car startup.
According to a report by industry site Gasgoo on Friday, the Chinese carmaker plans to shed 1,200 employees from its payroll. The cuts will be complete by September as Li Bin, chairman and CEO of Nio, likely looks to cut costs. After the layoffs, Nio will employ 7,500 people. Those facing cuts will come from human resources and legal departments, per the report, which cited an internal email.
Nio will preserve its research and development workforce as well as its user services department in the job cuts.
The company's had a rough go throughout 2019 so far after being hyped as China's Tesla. The startup launched its first mass-market vehicle, the ES8 SUV, with Tesla Model X-rivaling specs and a lower price. The company delivered just 164 ES8s last month, however, according to Gasgoo. Month-to-month, sales are down from 1,340 units in June to 837 units in July. As of the end of July, Nio delivered 8,379 cars this year. Most of the deliveries have been for the more affordable ES6 SUV.
Part of Nio's poor performance can likely be attributed to a slowing Chinese auto market. The US-China trade war has slowed new vehicle sales and they've contracted in the world's largest auto market for 13 months straight. Just today, China announced it would resume 25% tariffs on US-imported cars to China. Either automakers will need to pass on the extra costs or let the tax eat into profits.
While that's not a problem for homegrown Nio, it may reduce consumer confidence at large.
