BEIJING, December 6 (TMTPost)— The American Depositary Receipts (ADRs) of Nio Inc. Rose as much as 11.4% in the morning session on Wednesday, after the Chinese electric vehicle (EV) manufacturer. Shares settled 4.3% higher that day, outperforming the market as the U.S. stock benchmark S&P 500 fell the third consecutive day to the lowest in two weeks.

Credit：Visual China

Nio shares surge following a report about possible spinoff. The EV maker plans to spin off its battery manufacturing unit as early as 2024, Reuters cited people with knowledge of the matter. After the spinoff, the top engineers at battery unit will join the new company and some staff will be transferred into other departments at Nio, and the senior manufacturing engineers at Nio will reach out to external investors to back the company, according to the report. It added that members of the engineering team include former Apple and Panasonic employees and some of engineers at battery unit once worked on quality and supplier management at Tesla’s battery facility in Nevada.

Nio didn’t resond to the report. The sources said such spinoff plan underlines Nio’s working to achieve profitability sooner since it previously planned to develop and produce some batteries on its own and outsource production for the remainder to other suppliers.

A day before the spinoff news, Nio posted mixed financial  results in the quarter ended September 30. On an earnings call with analysts, Nio CEO William Li his company decided to optimize the organization and improve execution efficiency as it found there some some inefficiencies within the orgniaziton. Specifically, the firm will hold off and scaled down those projects without any improvement in financial performance in three years, Li said. Taking the batttery buinsess for an instance, Li said Nio will continue research and development (R&D) but outsouce the production if it forecasts the in-house battery can not devlier better financial performance within three years.

Financial report showed Nio posted less-than-expected loss despite the price war deepening. Basic and diluted net loss per ordinary share in the third quarter stood at RMB2.67 (US$0.37), compared with analysts’ estimated RMB2.91.That was larger than the RMB2.53 per share loss a year earlier but smaller than the loss of RMB3.7 in the previous quarter. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, non-GAAP net loss per share of RMB2.28 (US$0.31) came in narrower than expected by RMB0.37, or US$0.05. Revenue in the September quarter surged 46.6% year-over-year (YoY) to RMB19.07 billion, falling short of the projected RMB19.37 billion.

As one of highlights during the third quarter, Nio delivered 55,432 vehicles with a 75.4% YoY increase, setting a quarterly record. The vehicle margin almost doubled from the previous quarter to 11.0% though less than the margin of 16.4% a year earlier. Nio said the yearly decrease in margin was mainly attributable to changes in product mix, partially offset by the decreased battery cost per unit, while the sequential increase was primarily due to changes in product mix, as well as decreased promotion. William Li attributed financial performance to increased sales mix for sales mix for higher priced models, decreased parts costs, improved economies of scale. The executive said his company completed a thorough review of its two-year operating plans to determine our objectives, priorities, and action plans, and has identified opportunities to optimize its organization, reduce costs and enhance efficiency. He vowed to continue to focus on advancing core technologies, developing key products, and expanding sales and service capabilities.

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