Electric vehicles are considered part of the future of transportation, but in the present day, conventional automakers tend to have trouble selling them, and startups tend to have trouble making money on them.
The latest example of the latter phenomenon appears to be Nio, a Chinese company listed on Wall Street and backed by the Tencent conglomerate and other major tech and investment firms. Nikkei reports that the startup EV maker, after laying off hundreds last month, canceled its scheduled earnings call and slashed 1,000 more jobs this week.
The reason? The company reported a $478 million loss in its latest quarter, far steeper than both the previous quarter and for the same window last year. Nio vehicle deliveries, meanwhile, dropped 10 percent compared to the previous quarter.
Officials vowed to implement efficiency and cost-cutting measures amid challenging market conditions, but the Nikkei report suggested the latest in a series of blows to the company raised serious questions about its long-term viability.
Nio recalled more than 4,800 cars earlier this summer, and faces growing competition in the EV segment — particularly as Tesla prepares to open up a factory in Shanghai.
More damaging, however, was the Chinese government’s move to phase out subsidies for electric vehicles. Nio cars reportedly cost car buyers $8,000 more today than they did just one year ago.
The company plans to raise $200 million from Tencent and its CEO, but the Nikkei reports the company also expects to get $1.5 billion from a state-owned capital fund under a deal announced earlier this year — which would certainly go a long way toward helping anyone’s bottom line.