NIO has laid off 70 employees and closed an office in Silicon Valley

Chinese EV startup NIO has laid off 70 employees across two Silicon Valley offices, one of which is now closed, according to a filing with California’s Employment Development Department. The cuts started in early April, shortly after the startup announced it was laying off 3 percent of its workforce in China.

Twenty employees were let go from the company’s North American headquarters and R&D center in San Jose, California, while 50 employees were cut from NIO’s San Francisco office, which housed some of the startup’s user interface and experience teams. The San Francisco office has been closed.

The cuts are small relative to NIO’s total number of employees — the startup disclosed it had 640 employees in the San Jose office alone at the end of 2018 and some 10,000 worldwide, according to the company’s financial filings — but they’re a sign that the young electric automaker’s early momentum is cooling.

“After four years of rapid growth, we’ve set up a global organization. However, fast development has also posed issues like repetitive functional departments, undefined work tasks, unclear work responsibilities, and insufficient work for certain people,” a spokesperson for NIO said in a statement to The Verge. “We would like to solve them by optimizing management efficiency this year.”

Founded in 2014 as NextEV, NIO has already designed the EP9, an all-electric supercar that is one of the fastest in the world, plus two SUVs, the ES8 and the ES6. The ES8 began shipping last summer, and NIO has delivered more than 15,000 of them since. The ES6 is slated to go into production later this year.

NIO’s cars are currently being built by Chinese state-owned automaker Anhui Jianghuai Automobile Group, or JAC Motors. NIO originally planned to temporarily use JAC to make its cars while the startup built its own massive factory in Shanghai. But the company announced it had abandoned those plans in March, and that it will continue to have its cars contract manufactured.

NIO became a publicly traded company on the New York Stock Exchange last September, though it raised far less money than it had originally hoped. And while NIO beat its own expectations for sales in 2018, it has gotten off to a really slow start in 2019.

On a March 5th conference call with investors, NIO’s chief financial officer Louis Hsieh said he was “confident in [NIO’s] growth prospects in the coming year,” but that a forthcoming decision from the Chinese government to cut subsidies for electric vehicles was creating “uncertainty.”

“Up until now, NIO has done just about everything right,” Michael Dunne, who runs automotive consulting firm ZoZo Go. “From here, can they ramp production and sales while sustaining quality? That’s the test.”

Correction: NIO laid off 50 people in San Jose and 20 in San Francisco, not the other way around. NIO has closer to 10,000 global employees when counting those outside its R&D divisions, as opposed to 3,500, which this article previously stated. The second and third paragraphs have been updated.