NIO, the Chinese EV company, has recently announced that their plan for building a factory in Shanghai and starting their production has gone down.
A press release dropped on Tuesday with stats on the company's financial status, and you can tell that 2018 was not their year, as they came to a $1.4 billion net loss (ouch!)
- “In 2017, NIO signed framework agreements and memorandums with the government and related entities in Jia Ding, Shanghai, to build a manufacturing plant for NIO. Recently, the Company has agreed in principle with these contractual counterparties to terminate the plan for this manufacturing plant, pending signing of the definitive termination agreement.” -
The Shanghai factory was not planned to open until some time in 2020, so NIO signed with JAC Motors (a Chinese automobile manufacturer) to build the ES8 and ES6 so that they don't lose money in the meantime (well that worked out well) and produce cars while everything falls into place. Except it didn't, so I guess their work with JAC Motors won't stop there, as NIO announced that they will continue to produce cars, just won't do it themselves.
A report by NIO states that JAC has made 12,755 ES8s in 2018 and 11,348 were delivered, which exceeded the company's target with 26.44% for Q3 and let me tell you, as someone working in marketing - that's a KPI to die for!
However, the arrangement between the EV startup and JAC Motors states that NIO has to pay them for every car they make and keep in mind that they paid JAC $14.5 million upfront when the startup went public in September, which is before any production even began.
The EV startup did well when it comes to making sure their cars are produced, but man, did they pay the price for that! And still, it's a bit confusing how they maxed their goals and even stretch goals, but the plan for building their factory went down. I am guessing someone did a lousy job in calculating or there is something more that we still are not aware of.
Nevertheless, we still have to wait and see what happens, as for now NIO is determined to keep growing...at least in its short term plan.