(Yicai Global) Sept. 26 -- Nio has denied a Bloomberg News report that claimed the Chinese rival to Tesla had lost USD5.7 billion over four years, saying its actual loss was USD3.1 billion, and announced plans to spin off its non-core business.
The Shanghai-based firm's losses amount to CNY22 billion (USD3.1 billion) based on non-generally accepted accounting rules, the 21st Century Business Herald reported, citing Chairman Li Bin. CNY10 billion of that went on research and development, Li said yesterday on an earnings conference call postponed from Sept. 24.
Nio's decision to cancel the call scheduled for the day it revealed its second-quarter loss widened 83 percent year on year to CNY3.3 billion (USD463 million) further rattled investors. Its stock [NYSE:NIO] closed down 20 percent at USD2.17 after hitting a 52-week low of USD1.97. The shares gained 4 percent in premarket trading when Nio rescheduled the call for yesterday, but closed 5.3 percent lower after it.
The second-quarter loss stemmed largely from a product recall, Chief Financial Officer Xie Dongying said. Nio recalled more than 4,800 ES8 vehicles in June over fears that their batteries may spontaneously combust. After deducting the CNY339 million (USD43.3 million) recall cost, the profit margin on auto sales was minus 4 percent, better than the minus 7.2 percent in the first quarter.
Nio has faced sales challenges as have other electric vehicle makers since China canceled subsidies for the sector, Li noted.
The firm will also hive off part of its non-core businesses, Xie said. Nio was planning to spin off its charging business Nio Power and carry out independent financing, hoping that Nio Power will boost its parent company's share price when it is weaned off support, according to previous media reports.
Nio announced earlier this month that it would trim its workforce by 2,100 to 7,800 staff, closed a Silicon Valley office in May, and in March canned plans to build a Shanghai factory that would have allowed it to start making its own cars. State-owned carmaker JAC Motors is Nio's contract manufacturer.
Editor: Ben Armour