Nio To Eliminate 21% Of Global Workforce As Q2 Loss Widens, August Deliveries Miss Mark

Chinese electric vehicle maker Nio Inc – ADR NIO reported better-than-expected second-quarter revenue Tuesday, although the company's loss exceeded estimates.

August deliveries rose over 100% from the previous month but came in below guidance. The company said it will pursue job cuts and restructuring activities to counter macro weakness.

Revenues Top Estimates, Loss Widens

The Shanghai-based company reported second-quarter revenue of 1.51 billion yuan ($219.7 million), down 7.5% from the first quarter. This was better than the consensus expectation of $184.6 million.

Gross margins contracted further from a negative 13.4% in the first quarter to a negative 33.4% in the second quarter.

The net loss widened from 2.65 billion yuan to 3.31 billion yuan ($482.7 million). Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, the adjusted net loss was 3.19 billion yuan ($464.7 million).

The adjusted net loss was 3.11 yuan (45 cents) per share, wider than the 2.42 yuan per share loss in the first quarter. Analysts had forecast a loss of 18 cents per share for the quarter.

Cash and cash equivalents, restricted cash and short-term investments stood at 3.46 billion yuan ($503.4 million) as of June 30.

Nio delivered 3,553 vehicles in the second quarter, comprising 3,140 ES8s and 413 ES6s.

This represented a decline from 3,989 deliveries in the first quarter., all of which were ES8 models, as the ES6 was launched June 18.

Monthly Deliveries Rebound, Yet Trail Guidance

Deliveries totaled 1,943 in August, comprising 146 ES8 and 1,797 ES6 vehicles.

This represented a 132% increase from 837 deliveries in July, when Nio was hit by a battery recall, macroeconomic weakness exacerbated by the U.S.-China trade war and a reduction in EV subsidies.

The company had earlier guided to August deliveries of 2,000-2,500.

Layoffs Ahead 

Nio said it is attempting to overcome the weakness stemming from softer macroeconomic and auto market conditions by working hard to expand its market penetration and through technological advancement.

"Starting in October, we will begin delivering the ES6 and ES8 with an 84-kWh battery pack, extending their NEDC driving range to 510 km and 430 km, respectively," CEO William Bin Li said in a statement. 

Nio also said it is targeting to reduce its global headcount from over 9,000 in January to around 7,800 by the end of the third quarter.

The company will also pursue a leaner operation through additional restructuring and spinning off some non-core businesses by year end, it said.

For the third quarter, the company expects vehicle deliveries of 4,200 to 4,400 units, an 18.2%-23.8% increase from the second quarter.

Revenue is projected at between 1.59 billion yuan ($232 million) and 1.66 billion yuan ($242.2 million). Analysts, on average, forecast revenue of $558.78 million for the quarter.

The company also said it is cancelling its earnings call scheduled for 8 a.m. Tuesday.

Nio shares were plunging 15.44% to $2.30 in Tuesday's premarket session. 

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Photo courtesy of Nio.