NIO, China’s leading EV startup, announced its third production vehicle this past weekend, a small and sporty all-electric SUV called the EC6. The Tencent-backed automaker also announced it has developed a new battery pack that will enable all three of its production models to travel well over 300 miles on a full charge.
But neither of these new products will arrive until late 2020, meaning they offer almost no direct help to NIO when it comes to fixing the troublesome financial situation the startup is currently in. NIO announced Monday that it finished the third quarter of 2019 with just $274 million in cash, and also told its shareholders the company will only survive if it rapidly raises new funding.
“The Company’s cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months,” NIO wrote deep in its third-quarter press release Monday. “The Company’s continuous operation … depends on the Company’s capability to obtain sufficient external equity or debt financing.” NIO said it is “working on several financing projects” at the moment, but did not offer any information about what stages those projects are in, or how much money they might bring the company.
One thing keeping NIO alive at the moment is the company’s second production model, the ES6. This five-seater SUV is more affordable than its larger sibling, the seven-seater ES8 SUV, which was NIO’s first production model. NIO started selling the ES6 in June and the pace of deliveries has steadily increased in the months since. The startup said Monday that it shipped 4,196 ES6s in the third quarter of 2019.
NIO has only sold more ES8s than that in the final quarter of 2018, which was the company’s best quarter to date. Since then, ES8 sales have plummeted thanks to a combination of factors, like the Chinese government’s decision to reduce some subsidies on expensive electric vehicles, an overall slowdown in the country’s economy (and especially its automotive sector), and a battery fire recall that impacted nearly 5,000 ES8s.
The ES8’s struggles dragged down NIO’s business in 2019.
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