A report earlier today said some of Nio‘s departments were asked to prepare reserve lists of layoffs, which may widen the original dismissals to 20 percent to 30 percent.
(Image credit: CnEVPost)
Nio (NYSE: NIO) denied that it will make further layoffs after a report earlier today sparked discussion.
The company has no plans for further layoffs and will continue to be dynamic in the markets it operates in, Nio said in a brief statement shared with CnEVPost.
Earlier today, a Bloomberg report cited people familiar with the matter as saying Nio may make further layoffs to cut costs and improve efficiency.
Nio founder, chairman and CEO William Li announced plans for organizational optimization in an internal letter on November 3, including cuts of about 10 percent of positions, with the adjustment to be completed within November.
Some of Nio’s departments were asked to prepare reserve lists of layoffs, which may widen the original dismissals to 20 percent to 30 percent within the unit, the Bloomberg report said, citing some of the people.
Any cuts would apply primarily to non-core businesses or those that require significant investment and don’t generate quick returns, the people said, adding that other, more central parts of Nio’s business, such as sales, are still hiring.
Some international expansion plans, including entry into the US market, have also been delayed or put on hold, one of the people said, noting the changes occurred earlier this year, according to Bloomberg.
As of December 31, 2022, Nio had 26,763 full-time employees, according to its 2022 annual report.
In an internal letter dated November 3, Li said Nio would improve resource efficiency and defer or cut investments in projects that do not contribute to the company’s financial performance over three years.
Local media outlet 36kr subsequently reported that most of Nio’s businesses would see layoffs, but the percentages would vary, with the battery and phone businesses being the most likely to be hit.
Li said in the company’s third-quarter earnings call on December 5 that it would reduce investment in businesses that do not contribute to performance in the short term, but would continue to invest in its core business and technologies.
Nio already has a sales force of about 5,700, with more than 3,000 recently hired, Li said on the call.
For the in-house manufacturing of batteries, Nio doesn’t see the possibility of that business helping to improve gross margins in three years, so the company has chosen other approaches, he said.
Nio will continue to work on battery cells, materials, and packs, but will commission production to reduce costs, Li said at the time.
Nio will continue to invest in its core technologies to ensure a competitive advantage, Li said, adding that the new models that Nio will unveil at Nio Day 2023 will feature many of the world’s leading technologies.
Yesterday, Reuters reported that Nio plans to spin off its battery manufacturing unit as part of the company’s turnaround, cost reduction and efficiency efforts.
The spin-off could take place as early as the end of this year, after which the battery unit will seek outside investors and a valuation will be decided at a later date, according to the report.
After Nio began layoffs in November, there was a lot of discussion on Chinese social media after some users questioned the possibility of Nio going out of business.
At the Guangzhou auto show in late November, Nio co-founder and president Qin Lihong dismissed those questions and rumors, saying that Nio will not go out of business and is in no way likely to do so, and that consumers can feel assured to buy Nio’s cars.
