Chinese electric vehicle maker Nio said in a press release on Monday that Louis T. Hsieh has tendered his resignation as chief financial officer of the company for personal reasons, effective Wednesday. The company said that it is searching for Hsieh’s replacement and will move quickly to fill the role.
Following the announcement, Nio closed at USD 1.48 per share on Monday, down by 2%. The stock price dropped another 2% to USD 1.45 in after-hours trading. In early March, Nio was trading at above USD 10. The company’s market capitalization now stands at only USD 1.55 billion.
Nio’s management shift came less than two weeks after the municipal government of Huzhou, a city in China’s eastern Zhejiang province, ended talks with the company on an RMB 5 billion (USD 700 million) investment deal.
The Chinese EV maker booked nearly RMB 3.3 billion (USD 478.6 million) in net losses in the second quarter of this year, in part due to decreased vehicle sales that were a consequence of subsidy cuts announced in late March and a macroeconomic slowdown in China. The second quarter net losses represent an increase of 25.2% from the first quarter of 2019 and an 83.1% increase from the same period in 2018.
Nio will not be able to break even this year and might need another RMB 15 billion in funding between 2019 and 2020 to keep its cash balance at a reasonable level, according to analyst Victoria Li, who published her findings on Smartkarma earlier this month.
She said that chances are that Nio will be able to survive by raising funds from private investors this year, even if public markets are less willing to fund the company. She added that the situation remains touch-and-go.
Nio disclosed in September in its second quarter earnings release that an affiliate of Tencent Holdings Limited and Bin Li, chairman and chief executive officer of the company, have agreed to subscribe to USD 200 million in convertible notes, adding that placements of such notes were expected to close before the end of September. However, Nio has not indicated whether this transaction has been completed.