The Chinese EV maker Nio Inc (NYSE: NIO) is preparing to reduce its staff by 10%, according to reports from Bloomberg on Friday, November 3.
The layoffs are expected to be complete by the end of the month and are reportedly part of the ongoing efforts to boost efficiency within the company.
Per the company’s CEO, William Li, the staff reduction is mainly focused on removing redundancies in the firm.
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Nio’s performance throughout 2023 can best be described as mixed. On the one hand, it has achieved notable growth delivering 33% more vehicles in the first nine months of the year – 110,000 – compared to the same period in 2022.
On the other hand, the EV maker’s stock has offered lackluster performance since January 1. It saw a notable rise during the summer months but has been on a decisive decline since. Overall, the company’s shares are down a worrying 19.11% year-to-date (YTD).
Nio facing significant pressure in EV market
Part of the reason for such performance is the significant pressure Nio has been under due both to the increased efforts of its competitors and to the overall slowdown of the Chinese economy.
Early in 2023, companies like Tesla (NASDAQ: TSLA) and BYD (HKEX: 1211) ramped up the pressure on other EV makers in China by starting an extensive price-cutting program. The decision forced other companies to take similar measures in an effort not to lose market share leading to a significant reduction in profit margins.
Additionally, despite the general interest in clean energy, there have been signs that the EV industry is facing setbacks across the world. Only a day before, on November 2, Lucid Motors (NASDAQ: LCID) revealed it is offering $10,000 cashback on new vehicles to offset dwindling demand.
While Nio managed to significantly boost the number of deliveries in 2023, it is important to note that it has, so far, fallen short of its annual target of 250,000 vehicles. In addition to this, Nio has been suffering from increased costs of R&D partially due to its expansion into other fields such as mobile phones and improved batteries.
Nio seeking expansion opportunities amidst a stiffening market
According to the company’s CEO, the move toward mobile phones is driven by the need to give customers a better experience by making the connectivity between their cars and other devices more seamless.
While all of this has harmed Nio’s bottom line, the fact that the company is investing in further innovation constitutes a silver lining and may mean that the efforts will ultimately pay off for the EV maker reversing the downtrend.
Additionally, Nio has been seeking new opportunities. For example, it was reported in late September that the company is in talks with Germany’s car-making giant – Mercedes-Benz Group AG (OTCMKTS: DMLRY) – over a potential EV technology partnership.
Nio price analysis
Despite its troubles, Nio’s shares have been experiencing an uptrend since the start of November. At the time of publication on November 3, Nio’s stock stood at $7.78 having risen 4.43% within 24 hours. Additionally, it has been slowly rising throughout pre-market trading by about 1.63%.
Despite this short-term trend, Nio’s performance over the previous month has been disappointing as its shares dropped 9.52% and fell below their resistance levels on multiple occasions in October.
It is also important to note that investors have signaled their concerns over the state of the EV maker in September after the company announced it is planning to raise $1 billion through a convertible bond offering. The statement sent immediate shockwaves and saw Nio’s shares drop 17% and wipe approximately $1.5 billion in market cap.
With all of this in mind, the AI on CoinCodex predicts that Nio will see modest growth throughout the rest of November and end 2023 with its shares worth $9.37.
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