China's EV startup, NIO, indefinitely delayed its next electric sedan just six weeks after presenting a concept version of the car at the Shanghai Auto Show. The news comes when the start-up published unaudited financial results for the first quarter of 2019, which show that NIO lost $ 390 million because the deliveries of its electric SUV ES8 were reduced to 3,989 (compared to 7,980 during the fourth quarter of 2018).
did not set a shipping date for the sedan, known as the ET7, but the company's founder and CEO, William Li, said it was postponed during a call to investors on Tuesday.
Li said that NIO recently decided to build the sedan on a new technology platform, which will roll back the car's timeline. He also said that NIO will not be able to build cars on this new platform until it has its own manufacturing facilities. The start-up currently subcontracts production to state-owned automobile manufacturer Anhui Jianghuai Automobile Group, or JAC, and will continue to do so for the foreseeable future after abandoning plans for a factory outside Shanghai.
Sedan sales have grown in the United States, but they accounted for about 50 percent of the overall auto market in China between January and January. September 2018, according to the automotive analysis firm JATO. "If you look at car sales in China, the two biggest categories are sedans and SUVs," said Brian Gu, vice president and president of NIO XPeng competitor, The Verge in April. XPeng also presented a sedan at the Shanghai Auto Show this year. "I do not think automakers are too concerned about being exposed" to fluctuations in sedan sales, he said.
Meanwhile, NIO said it will develop another new vehicle based on the technology that supports the ES8 and the upcoming ES6 SUV. This new vehicle will be launched in 2020.
In recent months signs have been building of a poor neighborhood. NIO fired about 4 percent of its global workforce in early May as part of an "organizational optimization program." In March, the start-up announced the cancellation of the Shanghai factory in March, news that triggered a series of securities fraud trials. the shareholders who believe that NIO lied about his plans when it was made public last year.
NIO said on Tuesday that found some help in launching a different factory plan, although details were scarce. The startup EV announced that it will create a new subsidiary in China and partners with investment and development firm Beijing E-Town, which will provide up to $ 1.45 billion in exchange for a minority stake. Beijing E-Town will help NIO find partners to help build a new manufacturing plant where the startup can develop and build vehicles on the next generation platform. As such, the fate of ET7 seems to depend entirely on this new effort.
NIO attributed its loss in the first quarter and the decrease in deliveries to some factors. On the one hand, the Chinese government is in the process of cutting generous subsidies for electric cars, which, according to the company, has depressed sales. But a slowdown in China's overall economy (especially in the automotive sector), which NIO says "has been exacerbated by the trade war between the United States and China," is another reason why the company's first car suddenly It is not selling too.
The company argued earlier that its slow start in 2019 was partly due to January and February being bad months for car sales, as Tesla CEO Elon Musk says He also used to justify the slow start of his own company's year. But NIO announced on Tuesday that it delivered only 1,124 cars in April, which "reflected a slowdown greater than expected in monthly deliveries", indicating that the problem was not isolated until the beginning of the year. NIO also expects deliveries to be reduced to between 2,800 and 3,200 vehicles in the second quarter, which would reduce revenues to between $ 169 million and $ 193 million.
In the call to investors, NIO CFO Louis Hsieh said the drop in sales of ES8 is also due in part to the fact that the company is about to launch the smallest ES6 and most affordable. Hsieh said that NIO currently has 12,000 orders in advance for ES6, and that 5,000 of them arrived in the last six weeks, after the SUV was on display at the Shanghai Auto Show. NIO also announced on Tuesday that the first production versions of ES6 left the JAC production line, before deliveries in June.
NIO is one of the few high-profile EV startups that have actually put a car on the road, even though it was only founded in 2014. The company initially created a limited-execution supercar called EP9 before starting the development in ES8 and ES6. NIO went public on the New York Stock Exchange last September and is backed by Chinese technology giants Tencent and Baidu. The start-up said it plans to sell electric vehicles in the United States, but has so far kept its focus on China, which, despite the recent recession, remains the largest market for electric vehicles in the world.