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Chinese start-up NIO, NIO, has indefinitely delayed its future electric sedan just six weeks after unveiling a concept version of the car at the Shanghai Auto Show. The news just announces the unaudited financial results of the first quarter of 2019, which show that NIO lost $ 390 million while deliveries of its ES8 electric SUV dropped to 3,989 (versus 7,980 in the fourth quarter of 2018 ).
NIO had not yet set the shipping date for the sedan, known as ET7, but the company's founder and CEO, William Li, said it had been postponed during a call from investors, Tuesday.
Li said NIO had recently decided to build the sedan on a brand new technology platform, which would delay the car's timeframe. He also said that NIO would not be able to build cars on this new platform until it had its own manufacturing site. The start-up is currently outsourcing its production to the national automaker Anhui Jianghuai Automobile Group, or JAC, and will continue in the foreseeable future after abandoning the construction project of a plant outside of Shanghai.
Sales of sedans have hit the United States, but they accounted for nearly 50% of the auto market in China between January and September 2018, according to the JATO automotive industry analysis company. "If you look at auto sales in China, the two biggest categories are sedans and SUVs," said Brian Gu, vice president and president of NIO, NIO's competitor. The edge in April. XPeng also unveiled a sedan at the Shanghai Motor Show this year. "I do not think automakers here are too afraid of being exposed" to fluctuations in sedan sales, he said.
In the meantime, however, NIO has announced the development of a new vehicle based on the technology behind ES8 and the future SUV ES6. This new vehicle will be launched in 2020.
The signs of a deprived neighborhood had been forming for some months. NIO fired approximately 4% of its worldwide workforce in early May as part of an "organizational optimization program". In March, the startup announced the cancellation of the Shanghai plant in March. This news has resulted in numerous lawsuits for securities fraud. shareholders who believe that NIO lied about its plans when it became public last year.
NIO said Tuesday that it at found help in setting up a different factory plan, even if the details were meager. The EV start-up has announced the creation of a new subsidiary in China and a partnership with the investment and development company Beijing E-Town, which will bring up to 1.45 billion dollars in exchange for a minority stake. Beijing E-Town will help NIO find partners to help build a new manufacturing facility where the startup can develop and build vehicles on the next-generation platform. As such, the fate of ET7 seems entirely dependent on this new effort.
NIO attributed its loss in the first quarter and the decrease in deliveries to a few factors. On the one hand, the Chinese government is slashing the generous subsidies granted to electric cars, which, according to the company, has resulted in lower sales. But the slowdown in the entire Chinese economy (especially in the automotive sector), which according to NIO "was exacerbated by the trade war between China and China," is another reason why the first car of the company does not sell so suddenly.
The company had previously argued that its slow start to the year in 2019 was in part due to the fact that the months of January and February were bad for car sales – an assertion from Tesla's president, Elon Musk, also invoked the slow start of his own business. But NIO said Tuesday it delivered only 1,124 cars in April, which "reflects a slower than expected monthly deliveries," noting that the problems have not been isolated before the start of the year. NIO also expects deliveries to drop between 2,800 and 3,200 vehicles in the second quarter, reducing revenues by $ 169 million to $ 193 million.
Louis Hsieh, chief financial officer of NIO, said the decline in sales of the ES8 is also partly attributable to the fact that the company is about to roll out the smaller and more affordable ES6. Hsieh said that NIO currently has 12,000 orders pending for ES6, including 5,000 in the last six weeks, after the SUV's presentation at the Shanghai Auto Show. NIO also announced Tuesday that the first production versions of the ES6 had been removed from the JAC production line before June's deliveries.
NIO is one of the few high-end electric vehicle startups to have put a car on the road, despite the fact that it was founded only in 2014. The company has originally created a limited-time supercar called the EP9 before starting the development of the ES8. and ES6. NIO went public on the New York Stock Exchange last September and is backed by Chinese tech giants Tencent and Baidu. The start-up has announced its intention to sell electric vehicles in the US, but has always focused on China, which, despite the recent slowdown, remains the largest electric vehicle market in the world.
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