Chinese EV maker Nio looks forward after USD 478.6 million net loss in Q2

China’s answer to Tesla saw its shares plunging to a record low after the announcement.

Photo: stock.tuchong.com

Chinese electric vehicle startup Nio reported on Tuesday a far bigger than expected net loss of USD 478.6 million in the second quarter of 2019 – an 83.1% year-on-year increase – and saw its shares plunging to a record low.

The company uncommonly canceled the planned earnings conference call after announcing its quarterly financial results.

US-listed Nio’s stocks dropped 20% to a record low price of USD 2.17 on Tuesday in the wake of this announcement, representing its plunging market value of USD 2.9 billion – only a quarter of what it was at its peak.

Despite the widening loss, which according to the company was largely caused by a voluntary recall in June involving nearly 5,000 ES8 SUVs after a series of battery fire incidents in China, its quarterly total revenue was USD 219.7 million, beating market estimates.

On the positive side, the upcoming auto sales season, as well as the recent-rollout policy, which allows Nio consumers to go away with a new vehicle with zero initial payment, may incentivize sales in the next half of this year.

The Shanghai-based automotive startup also says it expects to hand over between 4,200 and 4,400 cars in the third quarter to meet consumers’ needs, aiming a quarter-to-quarter increase of between 18.2% and 23.8%.

By the end of June, the four-year-old Nio reportedly shed off more than USD 5 billion in losses, a number Tesla took 15 years to rack up.

It seems unlikely that the company will turn profitable in short term, although it continues to push a massive layoff plan affecting 20% of its staffers, reportedly closed a Silicon Valley office, and sold its motor racing team Formula E, in a move to “further control spending” and “improve operational efficiency,” as Li Bin, Nio’s founder and CEO, explained it.

The high investment in vehicle production and the rising cost of sales and operation still demand the firm to raise more fresh money to survive. Especially at a time when the competition has been increasingly fierce – Tesla plans to produce its Model 3 in China – and the government scaled back the subsidy program for new-energy vehicles.

The company raised USD 200 million from its CEO, Li Bin and major shareholder Tencent earlier this month, via convertible bonds, to save its crunching cash-flow, Nio’s regulatory filing shows.

In addition, the delay of the quarterly report and the cancellation of the earning call may be related to the company’s expected team-up with Beijing-backed investment firm E-Town Capital, which could inject as much as USD 1.4 billion to the EV maker, 36Kr reported today.

Qin Lihong, the firm’s president, said that the cooperation between the duo is going well, when reached out by 36Kr.

In response to investors’ doubts, Nio rescheduled the earnings conference call for 8 pm Beijing time on Wednesday.