Coronavirus, cash concerns leave EV maker Nio with uncertain future

John Beltz Snyder

Chinese electric car startup Nio has had a roller-coaster couple of years here in the United States. After launching its IPO here in September of 2018, stocks tumbled, then quickly recovered, before falling again after disappointing delivery figures that same month. This past December, the company saw huge layoffs at its North American headquarters, before beating its quarterly sales expectations with sales up nearly 22% at the end of the year. Today, the rough ride continues, with Nio admitting, as Reuters reports, "substantial doubt about its ability to continue as a going concern," sending its shares falling once again.

Nio's shares were down 27.1% from previous close, to $2.12 as of this writing.

There seems to be a perfect storm of problems for the cash-strapped company, which saw demand dwindle in China after the government cut electric vehicle subsidies. Of course, the coronavirus outbreak has only made things worse, negatively affecting both production and deliveries of its electric vehicles. Its cash balance of $151.7 million as of Dec. 31 isn't enough to provide the required working capital and liquidity for continuous operation in the next 12 months, the company said in a statement. 

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According to Nio's end-of-year financial results, it suffered a net loss of $1.2 billion for the full year 2019, an increase of 17.2% from 2018. It delivered a combined 8,224 of its ES8 and ES6 vehicles in Q4 2019, and a total of 20,565 vehicles for the year.

Last month, it signed framework agreements with Hefei's city government to raise more than $1.42 billion and set up new manufacturing facilities.

"The parties are working on the legally binding definitive documents to be signed," Nio Founder and Chief Executive Officer William Bin Li said.

The company also made several private placements of convertible notes in February and March for an aggregate principal amount of $435 million to support its operations and business development.

Vehicle sales in China fell 18% in January while sales of battery electric and other so-called new energy vehicles plunged 54.4%, preliminary data from the China Association of Automobile Manufacturers (CAAM) showed.

This article contains reporting from Reuters.

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