(Bloomberg) -- Nio Inc. plans to spin off its battery manufacturing business, possibly before the end of this year, Reuters reported, citing two people it didn’t identify.
A valuation will be decided later, according to the report. The news came a day after Nio reported a wider-than-expected quarterly loss and its Chief Executive Officer William Li said opportunities had been identified to “optimize our organization, reduce costs and enhance efficiency.”
During an earnings call, Li said Nio will continue in-house development of cells, battery materials and packs, but will outsource production.
Nio sold about 142,000 electric vehicles in the first 11 months of the year, well short of its 250,000 goal. Founded in 2014, the Shanghai-based firm still hasn’t posted a profit. In November, it cut 10% of its workforce and has said it is considering spinning off non-core businesses to reduce costs.
A Nio spokesperson told Bloomberg News that the company won’t comment beyond what it has shared publicly, including Li’s outlook from Tuesday.
Nio invested at least 2.2 billion yuan ($307 million) in 2022 into battery research and development, and setting up a wholly controlled battery subsidiary. The entity, registered in October last year, focused on developing a type of cell that combines the two main battery technologies used for EVs — the ternary lithium cell, and the lithium iron phosphate battery.
The EV maker also made a move to secure raw materials, buying a stake in Australian lithium company Greenwing Resources Ltd. for AU$12 million ($7.9 million) in September 2022.
Nio is ramping up its cost-cutting measures, with Li pledging to cut or postpone projects that won’t improve its financial performance within three years. Along with recent headcount reductions, the firm is looking to decrease expenses in 2024 by around 2 billion yuan.
The company projects revenue of as much as 16.7 billion yuan in the three months through December, short of the 21.4 billion yuan average estimate from analysts. It expects to sell as many as 49,000 vehicles in the quarter — well below analysts’ average forecast of 59,426.
Despite the downbeat results, Nio’s New York-listed shares rose 1.5% Tuesday. They are down more than 20% this year.
--With assistance from Linda Lew and Chunying Zhang.
(Updates to add details throughout.)
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