Chinese electric vehicle start-up Nio announced in its fourth-quarter financial report this week it had scrapped plans to build its own vehicle manufacturing plant in Shanghai, citing weaker than expected sales.
Nio said it would instead continue to depend on its contract-manufacturing partnership with state-owned JAC Motors. The company pointed out that JAC’s assembly plant in Hefei in Anhui province has enough capacity and flexibility to support its medium-term growth plans, adding that production will remain at the current location at least for the next two or three years.
The company launched its first car, the ES8 seven-seater premium electric SUV, in June 2018. A second model, the ES6 a five-seater premium electric SUV, was launched in December.
Nio, which was listed on the New York Stock Exchange last September, announced the investment u-turn along with a 134% quarter-on-quarter rise in fourth-quarter revenue to CNY3.44bn (US$500m), lifting full-year revenue to CNY485bn. It sold 8,069 vehicles in the fourth quarter and 11,348 in the whole of last year while production amounted to 12,775 units.
Sales in the first two months of 2019 were 2,616 units which the company said represents a “greater than anticipated slowdown” after deliveries were front-loaded in December in anticipation of EV subsidy reductions at the beginning of in 2019 in China and other factors.
The company incurred a net loss CNY9.6bn for the year, up almost 94% on the previous year, which combined with slower than expected vehicle deliveries had prompted a more conservative approach to expansion.