Nio cofounder leaves in blow to Chinese electric vehicle start-up

Nio, China’s top electric car start-up by funding, has been hit by the departure of one of its founders after financial pressures led the company to cut its workforce by 10 per cent and sell its prizewinning racing team.

Company founder and former executive vice-president Jack Cheng left the company on Wednesday, according to an internal memo. Mr Cheng is a Taiwanese former Ford executive who often served as the company’s international face. 

Nio, which has been compared with Tesla because of its focus on selling premium electric cars, raised $1bn in a New York listing last year. But its share price has declined 54 per cent this year and its vehicle deliveries halved in the most recent quarter to 3,984 from the previous quarter. 

Nio is one of a batch of start-ups that raised billions as China became the world’s largest market for electric and hybrid vehicles, with sales topping a million units last year.

But growth has slowed this year as the government cut subsidies for purchases. 

The company said in an internal memo to employees seen by the Financial Times that Mr Cheng had retired from the company “due to his age”.

Nio said Mr Cheng had been responsible for vehicle development, supply chain management, and manufacturing. “We thank him for his long-term hard work and dedication,” it added. 

Mr Cheng’s exit follows a series of high-level departures from Nio. Li Zhang, the company’s former head of software, and Angelika Sodian, who headed Nio’s operations in Britain left the company in June. US chief executive Padmasree Warrior left at the end of last year. 

Nio raised $3.9bn in venture-capital funding in addition to its IPO, but has been forced to cut staff and sell assets this year due to continued losses, which amounted to $390m in the most recent quarter. 

The company will cut 1,000 positions worldwide this year or about 10 per cent of its workforce, it confirmed to the FT this month. Nio said in a May filing that it had laid off 70 employees across two Silicon Valley offices, one of which had closed.

Nio also said this month it had sold its racing team, which helped establish the company’s reputation by winning the FIA Formula E championship in its inaugural 2015 season.

Sales of new energy vehicles in China fell for the first time in more than two years last month, after Beijing cut central government subsidies for the purchase of such vehicles by about 50 per cent at the end of June. 

Analysts and investors say some aspects of Nio’s business strategy have created problems in addition to the general slowdown in EV sales growth and greater competition from established automakers who are moving into EVs. 

It was forced to recall 4,800 sport utility vehicles this year, following reports of three vehicles catching fire. It has launched costly schemes such as building clubhouses for owners and promising to swap batteries for its users when they run out of charge.

The company earlier this year sold equity to raise $1.5bn from the Beijing city government.