China’s Ministry of Industry has officially included electric vehicle manufacturer Nio in its database, allowing the company to produce vehicles in the country. The ministry’s website confirmed this development, though specific details about the timing or issuance of Nio’s manufacturing licence were not disclosed.
Partnership with JAC and Uncertainties
Since 2018, Nio has been collaborating with Anhui Jianghuai Automobile Group (JAC) for the contract-based production of electric vehicles. However, media reports suggest that as of now, Nio has not shared any information about the status of its manufacturing licence.
Impact of JAC’s Asset Sale Plans
The inclusion of Nio in the approved list is significant, as it helps alleviate uncertainties surrounding JAC’s plans to sell assets related to the two factories producing Nio electric vehicles. The China Securities Journal, a state-backed newspaper, reported on JAC’s sale intentions in October. Nio responded, assuring that such a sale would not hinder its future production activities.
Chinese Authorities’ Shift in Approach
Granting Nio a production licence marks a notable departure for Chinese authorities, who have been cautious about approving new production ventures. The industry has been grappling with overcapacity and an intense price war that has drawn in over 40 brands. This move suggests a shift in the regulatory landscape, allowing for more flexibility in approving new projects.
Comparison with Other Manufacturers
The approval for Nio stands in contrast to the challenges faced by other electric vehicle manufacturers. For instance, Tesla Inc. is reportedly awaiting regulatory approval for its expansion plans for the Shanghai plant, as of June. Additionally, U.S. luxury EV maker Lucid Group has been advised of a low likelihood of approval, according to media reports.
Permitting Process in China
To produce and sell cars in China, automakers must acquire permits from both the state planner and the industry ministry. The last electric vehicle manufacturer to receive both permits was Shandong-based Sinogold in May 2019.
Nio’s Market Standing and Strategies
Data from the China Passenger Car Association reveals that Nio secured the ninth position in terms of electric vehicle sales in the first ten months of the year, with 126,067 units. The company is actively working to enhance its profitability, implementing measures such as workforce reduction and deferring long-term investments to improve efficiency and reduce costs amidst the escalating competition in the market.
Nio’s approval to produce electric vehicles in China is a pivotal development, signalling a shift in the regulatory landscape and providing clarity on uncertainties related to JAC’s asset sale plans. As Nio aims to strengthen its position in the competitive market, this approval opens new opportunities for growth and innovation in the evolving electric vehicle industry.