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NIO Lays Off 70 Employees in Silicon Valley
COVID-19 and China
NIO House. PHOTO: Credit to NIO

Statistics from a filing with California's Employment Development Department show that Chinese EV startup NIO has laid off 70 employees across two Silicon Valley offices, one of which is now closed.

The company's North American headquarters and research and development centre in San Jose, calif., laid off 20 employees, while NIO's San Francisco office laid off 50 employees. The dismissal date of NIO laid-off employees is June 8, 2019, and its San Francisco office has been closed.

At the end of 2018, the company had 640 employees in its San Jose office alone and about 10,000 employees worldwide, according to NIO's financial documents. The cuts are small relative to its total number of employees, but they're a sign that the company's early momentum is cooling.

NIO has been making staffing changes so far this year, involving about 3% of the overall workforce. NIO's President QIN Lihong once talked about the issue of layoffs, saying that the company is like a child just entering adolescence, all organs of the human body must enter a faster metabolism, without exception.

“As a start-up company, our company is not doing well, mainly because of the management team, not the staff, which is very normal. I think you've had a little bit overinterpretation of our 3% recently.”

NIO's layoffs are mainly due to the high operating costs in the United States and aim to improve management efficiency. Just like a spokesperson for NIO said in a statement to The Verge: “After four years of rapid growth, we've set up a global organization. However, fast development has also posed issues like repetitive functional departments, undefined work tasks, unclear work responsibilities, and insufficient work for certain people.”

NIO, founded in 2014, has designed two SUVs, the ES8 and the ES6. The ES8 has been shipped since last summer, and NIO has delivered more than 15,000 units. The ES6 is scheduled to go into production later this year, along with the EP9, which claims to be the world's fastest pure-electric supercar.

NIO's cars are currently made by JAC Motors, a Chinese state-owned carmaker. NIO initially planned to temporarily use JAC Motors to produce cars, while building its own large-scale plant in Shanghai. But the company abandoned those plans in March and said it would continue to build cars under contract. Currently, NIO's biggest problem is a lack of funding, and NIO has been losing money from 2016 to 2018.

In 2016, the amount of loss was only CNY 2.5 billion. In 2018, the number increased to CNY 9.6 billion. The total amount of loss was CNY 17 billion in these three years. In the last quarter of 2018, NIO's gross margin rate changed from negative to positive, but the 0.4% gross profit rate is still far from Tesla's 20%.

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