Chinese electric car giant Nio considers deeper staff cuts amidst financial challenges: Report | Mint
Active Stocks
Mon Feb 26 2024 15:59:59
  1. Tata Steel share price
  2. 142.60 -1.99%
  1. Power Grid Corporation Of India share price
  2. 287.75 1.97%
  1. HDFC Bank share price
  2. 1,422.25 0.10%
  1. ITC share price
  2. 409.20 -0.58%
  1. State Bank Of India share price
  2. 759.00 -0.05%
Business News/ Companies / Chinese electric car giant Nio considers deeper staff cuts amidst financial challenges: Report
BackBack

Chinese electric car giant Nio considers deeper staff cuts amidst financial challenges: Report

Chinese electric car manufacturer Nio Inc. is reportedly considering further staff reductions, potentially expanding the initial 10% cut. The move aims to enhance efficiency and cut expenses amid challenges, with a focus on non-core businesses.

For representation purposes (REUTERS)Premium
For representation purposes (REUTERS)

Nio Inc., the Chinese electric car manufacturer, is considering additional staff reductions as part of its efforts to cut expenses and enhance efficiency. This comes shortly after the company revealed intentions to trim 10 percent of its workforce, according to sources familiar with the matter cited by Bloomberg.

Certain departments have been instructed to compile backup lay-off lists, potentially expanding the initial workforce reductions within the unit to a range of 20 percent to 30 percent, cites the report. 

Any potential workforce reductions are expected to primarily affect non-core businesses or those necessitating substantial investments with delayed returns, according to the wire.

Once regarded as a prominent player in China's electric vehicle market, Nio has consistently fallen short of its sales targets and remains incurring losses. As of the end of 2022, the company had 26,763 full-time employees, as reported in its latest annual statement. Beyond electric vehicles, Nio's business portfolio encompasses battery and semiconductor manufacturing, as well as mobile phones.

A representative from Nio stated that there have been no further job cuts, emphasizing the company's commitment to making "dynamic adjustments" in the markets it serves.

In a letter addressed to the staff, Nio's founder and Chief Executive Officer, William Li, characterized the earlier job cuts as a "tough but necessary decision" in response to intense competition.

Earlier this week, Li mentioned that Nio has identified opportunities to optimize its organization, reduce costs, and enhance efficiency. He stated that the automaker currently has approximately 5,700 employees in sales, with over 3,000 of them being added in the past few months. Additionally, Li emphasized that Nio will concentrate solely on the overseas markets it has already entered.

The consideration of additional job cuts implies that Nio is persisting in cash burn, despite a $738.5 million injection from an Abu Dhabi government-backed investment fund in June, securing a seven percent stake in the company. 

In September, the automaker proceeded to sell $1 billion of convertible bonds, and there were reports indicating it was contemplating raising an additional $3 billion from investors. Nio, at that time, stated it had "no reportable capital raising activity" aside from the convertible bond sale.

(With inputs from Bloomberg)

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 07 Dec 2023, 01:02 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App