Chinese electric vehicle maker Nio is taking over some plant assets from its manufacturing partner, Anhui Jianghuai Automobile Group (JAC) as the former moves closer to producing cars on its own to save manufacturing costs. This comes after the nine-year-old company recently got added to a Chinese industry ministry database permitting companies to produce vehicles in the country. So far, the company was permitted to produce and sell EVs in China only via the collaboration with state-owned JAC. Under the partnership from 2018, Nio paid JAC commission fees on each car it produced.
Nio’s manufacturing cost to be reduced by 10%
In October, JAC had put up its assets at the two plants – F1 and F2 – for sale. Nio, which has been producing its electric vehicles (EVs) at these plants, will take up some fixed assets and equipment at a price of 3.16 billion yuan (USD 442.19 million). The buildings and land use rights of one of the plants will be taken by Hefei Hengchuang Intelligent Technology, a state-owned industry park developer, for 1.42 billion yuan, Reuters reported.
With this move, Nio’s manufacturing costs will be reduced by 10% by bringing all production fully in-house, the company’s founder and chief executive William Li told analysts after the company reported a 10.8% year-on-year rise in net loss for the third quarter.
Nio-JAC joint venture
While EV maker Nio has been independently designing production lines and developing the manufacturing technologies at the factories, its joint venture with JAC has been operating and managing the plants since 2019, with JAC mainly in charge of hiring assembly workers. The joint venture has been crucial for the EV maker as China’s state planner has been restricting the growth of production capacity in the auto industry and is reluctant to approve new players to join the overcrowded market.
In terms of EV and plug-in hybrid sales, Nio ranked ninth in the first 10 months in China with 126,067 units, according to data from China Passenger Car Association.