Nio makes two all electric SUVs — the ES6, which seats 5, and the ES8, which has room for 7. Both are reportedly pretty good cars. They have contemporary styling and feature most of the digital geewizardry most new car buyers today expect. Sales began last year and were pretty good for a while, then tailed off as the company struggled with quality issues. Things took a turn for the worse in June when reports surfaced of battery fires in several ES8 vehicles, says TechCrunch.
Nio ES6, Image credit: Nio
The company was forced to recall nearly 5,000 ES8s to replace the problematic batteries. The company diverted all its efforts to manufacturing new batteries for the affected cars, which meant there were few left over to power cars coming off the assembly line. Predictably, sales dropped even further. Nio delivered just 837 cars in July. The share price of the company’s stock plummeted as nervous investors headed for the exits.
Nio has responded to the crisis by equipping all its cars with a larger 86 kWh battery pack which increases the range of the ES6 to 316 miles and the larger ES8 to 274 miles, a move that has helped sales recover somewhat. The company says it delivered more than 2,000 cars in September and 4,799 vehicles in the third quarter — beating its own estimates.
Nio, which has lost almost $6 billion since its inception, is moving aggressively to trim its workforce and sell off subsidiary business entities not essential to car manufacturing. Founder William Li says he is cutting back on R&D spending as well. The news about recovering sales and belt tightening has had a positive impact on investors. The stock is up 9% this week but is still down 49% from where it was a month ago.
Electric car sales in China are a matter of great concern. Total electric car sales have declined this year after the government eliminated some subsidies but those incentives were mostly targeted toward cars with relatively short range capabilities and should have little impact on long range vehicles like the ES6 and ES8. Nio has a long way to go to dig itself out of the hole it has dug for itself but at least sales are trending upward once again.
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