Despite its ambitions to take on Tesla, five-year-old electric vehicle (EV) startup Nio has encountered problems on its path to profitability, just as China’s auto market is slowing down and government subsidies have been slashed for new energy vehicles.
The firm, which has cultivated a devoted fan base, has Tencent, JD.com, Hillhouse Capital, and Temasek as its backers. It recently signed a preliminary agreement for USD 1.4 billion in funding from the government of Hefei, where the company will construct its new headquarters.
The New York-listed company, which trades under the ticker symbol NIO, warned in last December’s quarterly report that its cash balance was not adequate for continuous operations during 2020. Just two days before releasing its earnings report, at the company’s annual Nio Day, the firm announced its new model, the EC6, which is expected to compete against Tesla’s Model Y, according to Nio’s founder and CEO Li Bin.
The Chinese EV maker has also been incurring big losses—up to RMB 2.5 billion for the third quarter of 2019—and has recently reported an 11.5% delivery slump as a result of the coronavirus outbreak. As the company faces the real possibility of going bankrupt, will Nio make it through 2020?
To learn more, check out the first episode of China’s Tesla Challengers, a series that looks at the country’s leading EV companies.
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Episode two: These Chinese EV makers are Tesla’s biggest problem
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