SHANGHAI -- Nio Inc. reported a worse-than-expected quarterly loss, prompting the struggling Chinese electric-vehicle maker to pursue thousands of job cuts by the end of this month and the spinoff of some businesses by year-end.
Second-quarter net losses widened 83 percent from a year earlier to about 3.3 billion yuan ($463 million), according to a statement Tuesday. The figures were worse than the 2.6 billion yuan average estimate of two analysts surveyed by Bloomberg and it was the Shanghai-based company’s second-largest quarterly deficit based on available data stretching back to 2017.
The results help illustrate why cost overruns, weak sales, and major recalls have led Nio shares to fall 77 percent since its market value hit a record $11.9 billion about a year ago. More broadly, the company’s reversal of fortune illustrates why concerns are mounting that China created an electric-vehicle bubble that may be about to burst.
“People are wondering whether the company can continue to survive,” said Jason Chen, an analyst from Blue Lotus Capital Advisors. “Not many people care about delivery figures anymore.”
Nio shares fell 20 percent to close at $2.17 on Wall Street.
The company, which is backed by technology giant Tencent Holdings, has accumulated about $6 billion in losses since it was founded by William Li in 2014. Fire risks led to a mass recall of nearly 5,000 vehicles in June, a significant portion of the total 17,550 the company had ever sold as of the end of May.
Li said in Tuesday’s statement that a target has been set to reduce global headcount to 7,800 by the end of the third quarter from more than 9,900 in January. There will be additional restructuring and some non-core businesses will be spun off by the end of the year, he said, without elaborating.
Nio canceled the usual earnings conference call that occurs soon after the results are announced — a move that Chen said was “very strange.”
Though revenue surged more than 3,000 percent from a year earlier, that was a time when the company was just getting started to sell cars. It fell 7.5 percent from the first quarter. The company delivered 11 percent fewer vehicles from the first quarter but it forecast the number will rebound to between 4,200 and 4,400 units in the third quarter. Third-quarter revenue will rise as much as 10 percent from the second quarter, it said.
The picture for China’s EV market as a whole has dimmed in recent months. Deliveries in the country, where half of the world’s electric cars are sold, declined in July for the first time, and then again in August as the government scaled back subsidies.
Nio previously scrapped plans for a manufacturing plant in Shanghai after the government decided to provide support to Tesla, which aims to start production in China this year, another challenge for Li’s company. Annual capacity at the Tesla facility could eventually top 1 million vehicles, chief executive Elon Musk has said.