Nio, a prominent Chinese automaker known for its svelte, high-end electric SUVs, has started another round of layoffs in reaction to growing competition as well as the need to reduce expenses and reallocate resources.
In an internal letter that TechCrunch first published on Friday, William Li, the CEO of Nio, revealed this strategic move.
The firm's letter stated that following several weeks of talks regarding the company's two-year operations plans, there was an intention to fire roughly 10% of the staff.
This decision stemmed from various factors, among them being the commitment to further funding in core techs, facilitating competitive sales and service, launching new products and brands promptly, refining interconnected departments, eliminating unnecessary roles, and focusing resources more effectively on profitable endeavors in the coming three years.
William Li, co-founder and CEO of Chinese multinational electric car manufacturer Nio, speaks during an interview with AFP at the 20th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2023.
Tough Decision
Nio aims to finish this restructuring process by November. CEO William Li sent a letter expressing his concern for how these changes had affected his coworkers, stressing the need for the move in the face of intense competition and drawing a comparison between Nio's journey and a difficult marathon.
"I'm sorry to colleagues who may be impacted by the adjustments. This is a tough but necessary decision against the fierce competition. Our journey is a marathon on a muddy track. Please stay focused on efficient execution and improvement of system capabilities," Li wrote, as quoted by TechCrunch.
Like other producers of pure electric vehicles (EVs), Nio has been under pressure from a pricing war that the US automaker Tesla started at the start of the year. Price battles have reduced the profitability of exclusive EV manufacturers. These companies have to tighten their budgets and establish pivotal partnerships to survive in a highly competitive market.
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Nio, in the first three quarters of 2023, manufactured an impressive 109,993 EVs, according to Reuters. This is a 33.4% increase compared to the same period last year and beats the Chinese EV market's growth rate of 18.1%. After a slump in sales earlier that year, Nio managed to bounce back.
Nio stated plans to delay or reduce long-term project investments that won't improve its financial performance over the next three years, in addition to the layoffs. To ease financial strains and boost sales, the corporation is also looking into the idea of creating a dealer network across Europe.
China Gearing to Dominate Global EV Industry
China's increasing influence in the automotive sector is the background against which the announcement of Nio's personnel restructure is set.
The nation's technical innovations in automation and electric car production have drawn interest from international manufacturers. Experts expect Chinese automakers to dominate the global market by the end of the decade.
This trend has led multinational automakers to develop strategic relationships and invest in Chinese electric vehicle startups and research institutes, as per a New York Times report.
Volkswagen, for example, announced plans to build a $1.1 billion automotive research center in Hefei, China, and also purchased a 4.99% share in XPeng, a Chinese electric car company. China's automobile industry's strong competitiveness has spurred significant technological advancements.
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