SHANGHAI - Chinese electric vehicle (EV) maker Nio Inc (NYSE:NIO) may be planning for additional workforce reductions, reports Bloomberg. This follows an earlier 10% cut, as the company faces financial challenges, including a significant third-quarter net loss.
On Tuesday, Nio revealed a third-quarter loss per share of 2.67 yuan, which surprisingly beat analyst expectations. The loss comes in a landscape marked by Tesla (NASDAQ:TSLA)'s aggressive pricing strategies and cautious spending by Chinese consumers. Nio's revenue for the quarter reached nearly $2.7 billion (19.1 billion yuan), marking a 47% increase year-over-year but still falling short of estimates. The company's gross margin retreated to 8%.
Despite the revenue growth, Nio's vehicle margin stands at only 11%, which is an improvement from the previous quarter but a decline compared to last year's figures. In response to these financial headwinds, Nio is focusing on cost-efficiency measures, including workforce reductions and the suspension or termination of non-profitable projects over the next three years.
Additionally, Nio is in the process of acquiring assets from JAC Motors for RMB 3.16 billion and is considering divesting its battery business segment. These strategic moves are aimed at bolstering the company's position against competitors like Tesla and BYD (SZ:002594), which currently enjoys higher gross margins and threatens to challenge Tesla's EV market dominance.
For the fourth quarter, Nio expects revenues to range between 16.1 billion yuan and 16.7 billion yuan with vehicle delivery targets set between 47,000 to 49,000 units.
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