One of the seemingly more stable electric vehicle startups, Nio, is running into problems that have been building for some time. Following recalls and decreasing delivery numbers as well as investment issues, co-founder Jack Cheng has now departed, leaving Nio in jeopardy.
Cheng’s exit has been announced internally earlier this Wednesday with Nio claiming that Mr Cheng had retired from the company “due to his age,” according to a report by the Financial Times. The Taiwanese former Ford executive who often served as the company’s international face had last been responsible for vehicle development, supply chain management, and manufacturing.
Reasoning aside, Cheng is leaving the company at a difficult time. Financial pressures led the company to cut its workforce by 10 per cent and sell its Formula E racing team. More so, growth in China has slowed this year as the government in Beijing cut subsidies. Partly as a result, Nio’s vehicle deliveries halved in the most recent quarter to 3,984 from the previous quarter, also due to a recall of 4,800 sport utility vehicles this year, following reports of three cars catching fire.
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Things used to look very different for the young company though that had been compared to Tesla and raised billions on the stock market. The decline was exacerbated earlier this year with investors filing a lawsuit in the US after Nio abandoned plans for a factory in Shanghai. The lawsuit also included allegations of Nio making misleading claims about the impact of the updated Chinese subsidy situation and the slower-than-expected deliveries of their electric SUV.
Talking about deliveries, or production rather, Nio was last seen entertaining plans to build a factory in Beijing. Moreover, the company had announced the start of series production of its second ES6 model. Both series, the ES6 and the ES8, are currently manufactured at the Nio-JAC plant in Hefei. Besides, Nio was also working on expensive clubhouses for EV owners and a battery swap route – ideas that might set them apart but turned out (too) costly as a bottom line.
Analysts and investors quoted in the FT thus say some of the above aspects of Nio’s business strategy have created problems in addition to the general slowdown in EV sales growth and greater competition from established automakers who are moving into EVs. So it remains to be seen whether the EV startup will weather the times and come out stronger after some consolidation.
For now, however, the company will cut 1,000 positions worldwide this year, reports the FT. More so, co-founder Cheng’s departure follows a series of high-level exits. Li Zhang, the company’s former head of software, and Angelika Sodian, who headed Nio’s operations in Britain, left the company in June. US chief development officer Padmasree Warrior left at the end of last year reportedly.