Nio readies for spinoff amid losses

Chinese electric vehicle maker Nio (9866) plans to spin off its battery manufacturing unit, according to two people with knowledge of the matter, as part of the efforts by the company to turn profitable, reduce costs and improve efficiency.

The nascent battery unit, led by senior manufacturing engineers whose previous employers include Apple and Panasonic will seek external investors after the spin-off that could happen as early as the end of this year, with a valuation to be decided later, the people said.

The news came a day after Nio reported a wider-than-expected quarterly loss.

Nio declined to comment beyond founder and chief executive William Li Bin's comments on an earnings call on Tuesday that the automaker would continue to do in-house research and development on batteries but now plans to outsource all of the manufacturing.

The spin-off underscores Nio's efforts to turn profitable sooner, as its previous plan was to develop and manufacture some batteries on its own and outsource production for the remainder to other suppliers like Tesla does, one of the people said.

Under the plan, Nio battery unit's top engineers, some of whose past experiences that include working on quality and supplier management at Tesla's Nevada battery factory, will join the new firm while some staff will be merged into other departments, both of the people said.

In other news, Dekon Food and Agriculture (2419), a Chinese specialist in livestock and poultry breeding and farming, rose 1.5 percent in its debut in Hong Kong yesterday.