BEIJING, December 11 (TMTPost)— Chinese electric vehicle maker Nio Inc. denies recent report about its further layoff.

Credit：Visual China

“The company doesn’t have plan to cut more jobs and will continue conduct ‘dynamic adjustments’ in markets where it operates, ”Nio told Chinese news media outlet Jiemian, as a response to the recent report.

Nio may undertake more job cuts to slash costs and improve efficiency, and some of departments are facing prepared layoff that may widen the origial dismissal to 20% to 30% , Bloomberg reported, citing people familiar with the matter. The cuts were said to apply mainly to Nio’s non-core businesses or that requiring heavy investments but would not generate quick returns, revealed the people, adding that some of more central parts of the firm’s business such as sales are still hiring. Some overseas expansion plans, including foraying into the U.S. market, have been postponed or suspended earlier this year, according to the report.

The report came about a month after Nio announced its downsizing. Nio will lay off 10% of employees and the related personal adjustments will complete this month, the Chairman and CEO William Li, or Li Bin, said in a letter to staff on November 3. The coming two years will be the most competitive period during an ongoing transition of the auto industry, and the broader environment is filled with elevated uncertainties, Li noted at the beginning of the letter.

The 49-year co-founder admitted Nio has obtained more than 40% share in the battery electric vehicle market priced RMB300,000 above, following five new models delivered this year. But he seemed unsatisfied, noting that overall performance still falls short of expectations. “To be a winner qualified for the finals, we must further improve execution efficiency, and make sure enough resource to input in key businesses,” Li concluded. 

In the past two weeks, Nio has drawn up specific plans for organizational and business optimization, including to ensure long-term investments in core technologies and maintain leadership in technology and products, to make sure adaption of the sales and service teams to the fierce competition, and to keep nine core offerings under three brands well on the track to launch as scheduled, Li told employees in the letter.

The new round of cuts is unsurprising. Nio went on a hiring spree during the Covid-19 pandemic. The company’s workforce swelled to 30,000 to the date, doubling two year ago. However, the headcount expansion didn’t pay off. Li Bin has recognized preliminarily there were insufficiency problems inside in the beginning of the year. His wrote a letter at that time to warn employees that it is urgent to improve internal communication efficiency as the team has expanded too fast in the past year.

Founded in 2014, Nio has never turned around and is still struggling for profitability. Nio posted less-than-expected loss last week. 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.Revenue in the September quarter surged 46.6% year-over-year (YoY) to RMB19.07 billion, falling short of the projected RMB19.37 billion.

On an earnings call with analysts, William Li said 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 deliver better financial performance within three years.

Nio was reported to mull a spinoff of its battery manufacturing unit as early as 2024 right after its quarterly financial report.After the spinoff,the senior manufacturing engineers at Nio will reach out to external investors to back the company, Reuters reported. The report 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.

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