Chinese electric carmaker NIO(NIO: NYSE) CEO William Li responded to the company’s layoff rumors today, saying it needs to optimize management efficiency amid a broad slowdown in auto markets.
“NIO has edged closer to 10,000 employees. The decision to lay off staff is to improve operational efficiency.” Li said at a forum held by China Automobile Dealers Association.
Earlier this month, the company’s co-founder and president Qin Lihong (秦力洪) made similar remarks regarding the possible move of slashing its headcount by 10%. Company founder and former executive vice-president Jack Cheng (郑显聪) left the company on Wednesday, according to an internal memo. A former NIO employee said that who were laid off were mostly from marketing and overseas R&D departments.
NIO delivered 827 cars in July, a year-on-year decrease of 38%. In addition, NIO recalled 4,803 electric cars with potential battery problems on June 27 this year, following reports that three of its vehicles caught fire.
The firm has implemented costly schemes such as swapping batteries for users when they are about to run out of charge and building charging stations along the highway to support long-haul travel. NIO shows ambitions on tackling the range problem that has been baffling EV makers for long. With USD 290 million poured into the charging programs to date, the company seeks to spin off the department to relieve the pressures on its executives. NIO stock has dropped back to below its IPO level back in September 2018, with 50% pared off its share value.
In the first half of 2019, China’s cars sales plummeted to 9.9 million units, down 14% compared to the same period last year.
NIO is going through what Tesla has been through, and still going through.