Nio is looking to its partners for cost-cutting advice, saying their expertise and industry experience will be important in meeting its cost-cutting goals.
Nio (NYSE: NIO) appears to be placing more emphasis on cost control as its vehicle deliveries rise and the Onvo sub-brand’s first model is due to hit the market later this year.
The Chinese electric vehicle (EV) maker is publicly seeking cost-cutting advice from its supply chain partners, the first time it has done so in years.
In the “Partners” section of the Nio App, the company has added a “Cost Reduction Advice” page, where partners can submit their suggestions directly by filling out a form.
“Nio is a company with a long-term focus on cost savings and efficiency improvements,” the text on the page reads.
“Nio maximizes economic efficiency by advancing an all-hands cost mining program. Your expertise and industry experience are important to the achievement of our cost reduction goals,” the company writes.
“We invite you to provide positive cost reduction suggestions and tips, which you can fill out here or contact us via email,” it said.
Over the past few years, Nio’s big investments in facilities including Nio House and battery swap stations have often sparked discussions.
However, in the company’s view, these investments are necessary and a major part of the company’s expenditure lies in R&D investment.
Nio would immediately become profitable if it stopped investing in R&D, but the company cannot do that, its management has said several times before.
In 2023, Nio spent more than RMB 3 billion ($400 million) on R&D each quarter, including RMB 3.97 billion in the fourth quarter, bringing the full-year R&D investment to RMB 13.4 billion.
The company will report its first quarter 2024 earnings later today.
On November 3, 2023, Nio outlined an organizational optimization plan and reduced positions by about 10 percent that month, putting cost reduction more prominently on the agenda.
The company will improve resource efficiency and defer or cut investments in projects that do not contribute to the company’s financial performance over the next three years, it said at the time.
Nio can reduce costs in five areas: battery cells, chip development, battery swap, dealer network, and phone, Deutsche Bank analyst Edison Yu’s team said in a December 13, 2023, research note.
($1 = RMB 7.2454)
Nio president confirms construction of F3 plant has begun, says F1, F2 can no longer meet demand
