The shake-up of the phone team doesn't mean the business will stop, and Nio will launch at least 3 generations of smartphones, according to local media.

(Image credit: CnEVPost)

Nio's (NYSE: NIO) smartphone business head Yin Shuijun is leaving, marking the electric vehicle (EV) maker's latest move in shrinking its non-core business, according to a report in local media outlet 36kr today.

An internal Nio email on the evening of January 5 showed that Yin is leaving and the smartphone business will be headed by the company's hardware chief Bai Jian, according to the report.

Yin joined Nio in early 2022, and before that served as Chinese beauty app Meitu's president in charge of the phone business.

The phone team being reshuffled doesn't mean the business will be discontinued, 36kr's report said, adding that some industry insiders say Nio will launch at least three generations of phone products.

Nio previously planned to invest RMB 1 billion ($140 million) annually in its phone business, and the Nio Phone will also be adapted to models under the sub-brands codenamed Alps and Firefly, according to the report.

Nio launched the first Nio Phone, an Android-based flagship smartphone available in three variants starting at RMB 6,499, RMB 6,899, and RMB 7,499, at the Nio In 2023 Innovation Day event on September 21.

William Li, founder, chairman and CEO of Nio, emphasized that the Nio Phone is a device built for Nio car owners and will provide a new car-centric connectivity experience.

Nio Phone offers an action button that allows users to quickly activate more than 30 functions, including controlling the vehicle's functions such as adjusting the temperature of the air conditioning and switching on and off seat massage.

Nio's phone would be the world's first to be truly designed for cars, an approach that has no precedent before, Li said on September 17 before the phone's launch.

However, Nio's weak delivery performance in 2023 has led to pressure on its finances and a rethink of its investment in new businesses.

In an internal letter on November 3, Li said Nio planned to reduce positions by about 10 percent. It will improve resource efficiency and delay or cut investments in projects that do not contribute to the company's financial performance within three years.

In a report later on November 3, 36kr cited people familiar with the matter as saying that most of Nio's businesses would see layoffs, but the percentages would vary, with the battery and phone businesses being the most likely to be hit.

For the in-house manufacturing of batteries, Nio doesn't see the possibility of the business helping to improve gross margins in three years, so the company had opted for other approaches, Li said in a December 5 third-quarter earnings call.

Nio will continue to work on battery cells, materials, and packs, but will commission production to reduce costs, Li said on the call.

On December 6, Reuters reported, citing two people familiar with the matter, that Nio was planning to spin off its battery manufacturing unit as part of the company's efforts to turn around, reduce costs and improve efficiency.

($1 = RMB 7.1412)

Nio launches 1st smartphone: Starts at $890, connects seamlessly with vehicle cockpit