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(Bloomberg) – It took Tesla Inc. about 15 years to accumulate $ 5 billion in losses. The Chinese company Tesla did it in four.
The bleeding continues. Based in Shanghai NIO Inc. is about to announce Tuesday that he had still lost 2.6 billion yuan ($ 369 million) – about 4 million dollars a day – in the second quarter, according to the average of two estimates analysts. This would bring accumulated losses to the company, which is backed by the tech giant Tencent Holdings Ltd., at about $ 5.7 billion since William Li founded the automaker in 2014.
Cost overruns, low sales and significant recalls have led NIO to plunge 74% since its market value hit a record 11.9 billion dollars about a year ago. More generally, the company's reversal of fortune illustrates why there is growing concern that China has created a bubble of electric vehicles about to explode.
"This year and next year, there will be a lot of shuffling for these EV startups," said Siyi Mi, an analyst at BloombergNEF. "Before, venture capital pursued them, but that's no longer the case."
Total electric vehicle sales in China, where half of the world's electric cars are sold, fell for the first time in July after the government cut subsidies. Shipments fell further in August, suggesting that one of the last pillars of the strong automotive market in China, which fell by 14 over 15 months, is faltering.
China has cut subsidies for new energy vehicles – all-electric cars, fuel cell cars and plug-in hybrids – to help the sector get by and avoid the bubbles. This has undermined growth and prompted major Chinese electric car manufacturers BYD to announce recently that their profits would decline.
At NIO, the pressure is mounting to raise more funds. The automaker is looking to reduce its workforce by 14% to 7,500 people by the end of the month, according to the company. Incidents involving batteries that caught fire or spewed smoke forced NIO to recall about 4,800 vehicles, more than 20% of all cars sold. Second quarter shipments decreased compared to the previous three-month period.
The company also abandoned plans for a manufacturing plant in Shanghai after the government decided to provide financial support to Tesla. Instead, NIO entrusts Anhui Jianghuai Automobile Group Co. with the production of its ES6 and ES8 cars.
Contact the editor Matthew Walsh ([email protected])
Related: Electric car sales in China decrease for a second consecutive month
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