Chinese EV startup NIO has postponed the upcoming electric sedan indefinitely six weeks after the unveiling of a concept car version at the Shanghai Auto Show. The news comes when the startup is released unaudited financial results for the first quarter of 2019, showing that NIO has lost $ 390 million, as the deliveries of its ES8 electric SUV dropped to 3,989 (compared to 7,980 in the fourth quarter of 2018).
NIO had not previously set a shipping date for the sedan, known as ET7, but the company's founder and CEO, William Li, said it will be delayed during an investor visit on Tuesday.
Li said that NIO has recently decided to build the sedan on an entirely new technology platform that will shift the timeline for the car. He also said that NIO cannot build cars on this new platform until it has its own production facility. The startup is currently outsourcing production to car manufacturer Anhui Jianghuai Automobile Group, or JAC, and will continue to do so in the near future after giving up plans for a plant outside of Shanghai.
In the meantime, NIO said it will develop a new vehicle based on the technology that underlies the ES8 and the upcoming ES6 SUV. That new vehicle will start in 2020.
Signs of a poor quarter had been building up in recent months. NIO lost around 4 percent of its global workforce at the beginning of May as part of an & # 39; organization optimization program & # 39 ;. In March, the startup announced the cancellation of the Shanghai factory in Shanghai – news that led to a number of lawsuits about securities fraud of shareholders who believe that NIO lied about his plans when it became public last year.
NIO said Tuesday it has found some help in getting another plant plan off the ground, although the details were scanty. The EV startup has announced that it will form a new subsidiary in China and will collaborate with investment and development company Beijing E-Town, which will offer up to $ 1.45 billion in exchange for a minority interest. Beijing E-Town helps NIO find partners in building a new production facility where the startup can develop and build vehicles on the next generation platform. As such, the fate of the ET7 seems to be completely dependent on this new effort.
NIO attributed the loss for the first quarter and the fall in deliveries to a few factors. To begin with, the Chinese government is in the process drastic subsidies for electric cars & # 39; s, which the company says it printed sales. But a slowdown in China's overall economy (especially in the automotive sector), which NIO says "it has been exacerbated by the US-China trade war," is another reason why the company's first car suddenly doesn't sell so well .
The company previously argued that the slow start in 2019 was partly due to the fact that January and February were bad months for car sales, a claim Tesla CEO Elon Musk also justified the slow start of his own company until the year. But NIO announced on Tuesday that it only delivered 1,124 cars in April, "reflecting a more than expected delay in monthly deliveries," indicating that the issues were not isolated at the start of the year. NIO also expects deliveries to fall between 2,800 and 3,200 vehicles in the second quarter, reducing sales to between $ 169 million and $ 193 million.
According to the investor call, the chief financial officer of NIO, Louis Hsieh, said that the drop in ES8 sales is partly due to the fact that the company is about to roll out the smaller, cheaper ES6. Hsieh said that NIO currently has 12,000 pre-orders for the ES6, and 5,000 of them have come in the last six weeks after the SUV was shown at the Shanghai Auto Show. NIO also announced on Tuesday that the first production versions of the ES6 have been rolled away from the JAC production line, before deliveries in June.
NIO is one of the few high-profile EV startups that actually put a car on the road, despite the fact that it was only founded in 2014. The company initially created a supercar supercar, the EP9, before the development on the ES8 and ES6 started. NIO went to the New York Stock Exchange last September and is supported by Chinese tech giants Tencent and Baidu. The startup has said it is planning to sell EV & # 39; s in the United States, but it has so far kept its focus on China, which is still the largest electric vehicle market in the world despite the recent downturn .