Losing billions of dollars, the boss of Chinese electric car company vowed to compete with Tesla

Tram Ho

Thua lỗ hàng tỷ USD, sếp hãng xe ô tô điện Trung Quốc vẫn mạnh miệng tuyên bố sẽ cạnh tranh được với cả Tesla - Ảnh 1.

President of Chinese electric car maker NIO has made a commitment that it will improve the financial situation of the company as demand is increasing and the company’s efforts to cut costs are beginning to bear fruit.

“NIO sports cars not only compete with other electric cars but also high-class cars in the same price segment,” said William Li – Co-Founder of NIO and CEO. Meanwhile, the cost reduction will help expand NIO’s gross profit margin by 2020.

“I am very confident in the competitiveness of the company’s products. There is so much concern in the market but our sales are real,” Li said in an interview with Bloomberg. past.

NIO has amassed a loss of $ 6 billion since its inception in 2014 because of spending heavily on advertising and product development to attack emerging markets. The company’s third-quarter earnings will be announced on Monday which is expected to show a long way to reach the profit target.

While NIO has cut jobs and started narrowing marketing expenses, their financial situation is still difficult. Electric vehicle market in China is slowing as the government reduces subsidies. Meanwhile, competition is getting tougher as Tesla prepares to deliver the first Model 3 sedan manufactured in China to customers.

“NIO’s balance sheet shows very high liquidity risks. The key point will be whether they can have another round of funding,” said analyst Zhu Zhu. .

NIO’s stock has plummeted 61% since the company went public on New York last year. That puts the company’s market value at just $ 2.5 billion compared to Tesla’s $ 78 billion market cap.

In order to meet the higher demand, the company has launched an advertising campaign including a policy of applying 0% interest rate for 3 years and warranty support for vehicles registered to buy before the end of February / 2020. NIO sales will increase 44% next year to 29,973 units.

However, losses will continue to increase: In 2020, the loss is expected to be 1.2 billion USD in total revenue of 1.7 billion USD. Losses in the third quarter ending in September are expected to reach 381 million USD.

“Cost reduction efforts are still underway. We can, however, reduce costs in the first quarter of 2020.”

As part of a plan to cut spending, the company shifted from expanding NIO House showrooms to setting up smaller stores called NIO Spaces. By the end of the third quarter, NIO was reduced to 7,800 employees from 9,900 employees in January.

“NIO Houses are very useful for branding and user experience – they make a difference for the company. However, investing in them is quite expensive.”

With just US $ 500 million in cash, cash equivalents and short-term investments as of June 30, NIO had to find ways to fill up its ‘wallet’. They announced in September that Li and their Tencent shareholder agreed to buy $ 100 million in each of the company’s convertible bonds. Li said that NIO will issue a notice about this on Monday.

“NIO will be very short of cash recently. We are trying to get more funds but I will not expect any noticeable new information soon. For now, please take care of the quarterly report.” 3 of us “.

Share the news now

Source : Trí Thức Trẻ