Chinese electric carmaker Xpeng says Nio stock swings a ‘good lesson’ for rivals

TechCrunch | 7/10/2019 | Staff
jenny1246 (Posted by) Level 3
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Seeing your competitor undergo dramatic changes in fortune can be unnerving as there’s the fear that the same will happen to you. For electric vehicle maker Xpeng, Nio’s period of stock swings is a wakeup call for China’s EV startup boom.

Xpeng and Nio are Tesla -like Chinese startups competing with more established automakers such as Warren Buffett-backed BYD . Like Tesla, Xpeng and Nio design, manufacture and sell EVs through company-owned online and offline channels.

Sums - Cash - Investors - Alibaba - Foxconn

Both have raised large sums of cash from noted investors. Xpeng itself is backed by Alibaba, Foxconn and Xiaomi founder Lei Jun. As late, it’s seeking to raise at least $500 million in funding.

Nio’s investors include Tencent, Hillhouse Capital and Shunwei Capital, a venture fund co-founded by Lei Jun. Its shares were trading at around $2.50 apiece in June, a big fall from the $11.60 high it achieved shortly after debuting on NYSE in September.

Reasons - Slump - Sales - Quarter - Backdrop

The reasons for the slump are varied. Sales slowed down in the first quarter against a backdrop of subsidy reduction and macroeconomic headwinds in China. Losses amounted to $390.9 million in the period. To cope with sluggish performance, Nio said it would delay the rollout of its next-gen products to focus on existing models. It also planned to slash costs by cutting R&D spending and its workforce.

Nio’s stock rout “is a good lesson for the rest of us… to try to be more efficient and more sustainable,” said Xpeng president Brian Gu at the Rise conference...
(Excerpt) Read more at: TechCrunch
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