Amid the need to reduce costs, Chinese electric vehicle manufacturer Nio is set to dismiss approximately 10% of its employees. All affected positions are expected to be terminated by the end of November.
Tough Times Call for Cutting Non-Lucrative Projects
In an email obtained by Reuters, Nio conveyed its rationale behind the job cuts, stating it was a hard but necessary decision in the face of tough competition. The company is also curbing its long-term investments. Any projects that aren’t financially viable within three years will be deferred or discontinued. “We still have a performance gap compared to expectations,” the email continues. With Nio reporting 27,000 employees by the end of 2022 and continuing to expand, the automaker is likely to eliminate around 3,000 jobs.
Further details regarding the planned job cuts are yet to be disclosed. It remains unclear which positions or regions will be affected. While most of the company’s workforce is in China, it also houses design and development centers in Europe. Moreover, it’s uncertain if some areas will be more heavily impacted than others. Reports of the brand’s financial struggles surfaced in China several weeks ago.
Focusing on Battery Swap Stations
The overall price war in the electric vehicle manufacturing sector has impacted Nio significantly, particularly in the Chinese market, where Tesla’s extreme pricing pressure made a substantial impact early this year. Nio is heavily investing in expanding its battery swap stations to leverage the brand’s unique advantage and attract a larger customer base.
The Chinese manufacturer increased its global deliveries by 33.4% to 109,993 units in the first three quarters, predominantly bolstered by a strong third quarter. However, the first half of the year saw a marginal decline. On export markets, particularly in Germany, the business remains restrained, with only 885 vehicles registered.
Venturing into the US Market Without a Factory or Likely Subsidies
Despite the reduction in jobs, Nio intends to persist in its growth trajectory. As per Nikkei Asia, the company plans to sell its electric vehicles in the United States from 2025. However, Nio aims to import vehicles made in China to the USA, avoiding investments in a local factory, despite the possibility of obtaining American subsidies.
However, this could lead to potential issues with higher prices in the United States if competing products manufactured in North America receive a tax credit of $7,500, whereas Nio’s products might not.