Before the coronavirus COVID-19 broke out across China and now the rest of the world, Chinese electric vehicle (EV) maker NIO was already facing financial difficulties. Now its saying it might not survive because of the disease.
In a press release last week, the company said that after an assessment of its financial position, they doubt if they will still be operational 12 months from now.
“The Company’s cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months.”
The company recently released its 2019 Q4 results, which indicated net losses had widened 13.6% from the previous quarter to nearly $600 million CAD. The company’s shares plunged 16% on the release of the news.
Related: Nio, Tesla’s biggest competitor in China, announces third new EV SUV
Originally believed to be a serious challenger to Tesla in China, Nio has been struggling as of late already cutting thousands of jobs and putting plans for the construction of new car plants on hold. Since the first deliveries began two years ago, the company has only delivered a little more than 30,000 units of its two current models.
With Tesla completing its Giga Shanghai plant late last year, and the start of deliveries of the first made-in-China Model 3’s earlier this year, it is definitely going to be an uphill battle for NIO to get to a level where it can achieve economies of scale and begin to turn a profit.
