After accumulating more than $6 billion in deficits since it was founded in 2014, Chinese electric vehicle manufacturer NIO has vowed that it will turn around its finances in the short term. The electric startup mentioned that it is determined to improve its bottom line and increase its competitiveness in its home turf.
The company could very well keep its promise this time around as its recently imposed cost-cutting efforts have started to bear fruit. NIO has also seen an uptick in the demand for its products, particularly its new fully electric sport utility vehicles (SUVs). NIO expects its new electric SUVs to go head-to-head with products from its peers in China, while also competing with offerings from premium international brands such as BMW and Tesla.
NIO co-founder and chief executive officer, William Li Bin, stated that his team would be focusing on further reductions in the coming years. The executive stated that they expect to further widen the company's gross margin for 2020. Li also pointed out that NIO is confident in its product's competitiveness and the increase in sales numbers has only served to further strengthen that confidence.
Getting to this point has been a hard journey for NIO as it essentially was hemorrhaging money since it was founded. Since 2014, the company had accumulated a total deficit of more than $6 billion, resulting in a barrage of criticism from its investors and stakeholders.
NIO had used most of the investments it had accumulated for extensive marketing and product development. The investments have somewhat been worthwhile as the company was able to get a foothold in China's rapidly growing EV market.
The Chinese electric carmaker is still far from becoming profitable. The company is expected to publish its third-quarter earnings this week and analysts aren't too sure if it will contain a lot of positive numbers. However, some analysts have pointed out that the report could showcase the results of the company's recent cost-cutting measures.
Following increased criticism over its significant expenditure and its inability to generate profits, NIO was forced earlier in the year to greatly reduce its operating expenses. The company made massive job cuts and scaled backed its marketing expenditure in an attempt to appease its stakeholders.
Since it listed in New York last year, the company's stocks have dropped by more than 61 percent, sending its market valuation to below $2.5 billion. Despite the setbacks, some investors still feel positive about the company's business potential.
Over the weekend, NIO unveiled its latest electric SUV, called the EC6. The vehicle was well received by critics and potential customers. NIO has yet to announce the official pricing for the new model, but it did state that it should be delivering the vehicles to customers by July.
