Caught in capital crunch, the electric vehicle maker is working on going public on the STAR Market for more fundraising.
NIO electric car. Image credit: NIO website
Chinese electric vehicle maker NIO (蔚来, NIO:NYSE) is preparing for being listed on the Shanghai Stock Exchange sci-tech board that is officially launched on June 13, according to LatePost. Top institutional investors such as IDG Capital and Hillhouse Capital are engaged in the pre-listing activities.
NIO’s founder Li Bin (李斌) said inside the company that financing in CNY would be the primary way for NIO to grab funding in the future. The company’s Silicon Valley office was closed as of May 2019.
A new round of job cuts of the EV maker will be coming soon, according to the people who know this matter. Global headcounts of NIO would be reduced to 5,500 from 8,000, one of the people said.
We have reported that job cuts were a result of NIO’s lackluster financial performance when its president Qin Lihong (秦力洪) talked about 1,000 job cuts in the first half of this year. The annual financial report of NIO released in March shows that net losses of the company exceed USD 1.36 billion over the last year.
New energy manufacturing entails enormous amounts of capital input but remains deeply unprofitable for a long time. Tesla, which was founded 16 years ago still reports losses. Caught in capital crunch, NIO received USD 1.44 billion from a Chinese government investment fund until the end of May.
The report also shows that the gross profit margin is approximate -7.2% over the course of the first quarter, which means the company lost USD 4,000 for selling an ES8 electric vehicle regardless of operating costs.
An employee from NIO said the company threw countless cash into research and development in fields of autonomous driving, battery package and so on. According to an automotive supplier, R&D costs of NIO are close to those of BMW, almost six times higher than those of other Chinese vehicle manufacturers.
Generally speaking, domestic capital market could give higher market capitalization than the U.S. market, and therefore NIO will be willing to return and harvest arbitrage profits, according to a securities analyst.