Tencent-backed EV startup NIO is laying off 62 employees from its Silicon Valley office in San Jose, California, according to a new filing with the state’s Employment Development Department. It’s the Chinese company’s second round of cuts in the US this year, as NIO laid off 70 employees and closed a San Francisco office back in May. NIO began 2019 with 640 employees in Silicon Valley, according to financial filings.
The new round of cuts are part of “an optimization effort,” according to NIO’s director of North American communications, JoAnn Yamani. She also said they affected “every department.” NIO’s presence in the US is primarily focused on R&D and engineering.
Yamani’s comments echo what the company said following the previous round of layoffs in the US. “After four years of rapid growth, we’ve set up a global organization. However, fast development has also posed issues like repetitive functional departments, undefined work tasks, unclear work responsibilities, and insufficient work for certain people,” NIO told The Verge in May. “We would like to solve them by optimizing management efficiency this year.”
Founded in 2014, NIO started shipping its first vehicle, the all-electric ES8 SUV, in China in the middle of 2018, and the company delivered more than 10,000 of them by the end of last year. NIO also became a publicly traded company on the New York Stock Exchange in September 2018, raising $1 billion in the listing.
But the Chinese startup has struggled in 2019. The Chinese automotive market and the country’s overall economy have slowed throughout the year after decades of growth. At the same time, NIO says the expiration of certain government subsidies for EVs, as well as the trade war with the United States, have both impacted the company’s fledgling business. NIO also recalled nearly 5,000 ES8s thanks to a design flaw in its battery packs that created a fire risk.
In turn, ES8 sales declined in all but one month in 2019, with NIO delivering only 164 of them in July. (NIO hasn’t released sales figures for August.)
Relief may come with the company’s second EV, the smaller and more affordable ES6, which NIO has said is also cannibalizing ES8 sales. Deliveries of the ES6 began in June, and NIO says it has 12,000 preorders for the newer SUV.
Regardless, NIO is most likely going to miss its target of delivering 40,000 vehicles in 2019. Instead, the startup has spent most of 2019 undergoing a larger restructuring effort. The company has cut its global workforce from nearly 10,000 employees to about 8,000, and is expected to further trim that count down to 7,000. Earlier this year, NIO also abandoned a plan to build its own manufacturing plant in Shanghai, opting instead to continue paying state-owned automaker JAC Motors to contract manufacture the startup’s cars.
In May, the company indefinitely delayed a forthcoming electric sedan just six weeks after the concept version was announced. NIO also sold its Formula E team after the electric racing series wrapped up its fifth season in July. Just a few weeks later, one of the company’s three co-founders retired.
NIO is not the only Chinese startup with a US presence to experience trouble this year. In July, The Verge reported that Seres (formerly known as SF Motors) laid off 90 of its 300 employees and suspended plans for a US launch, despite being backed by commercial Chinese automaker Sokon.