NIO terminates Shanghai factory plan, posts 2018 loss

NIO Inc, a Shanghai-based electric car company, has given up its Shanghai factory plan after posting a loss of 9.6 billion yuan (US$1.43 billion) in 2018.

New York-listed NIO posted revenue of 4.95 billion yuan in 2018, with losses of 9.64 billion yuan, 92 percent more than 2017.

The company's vehicle sales hit 4.85 billion yuan for the year of 2018, accounting for 98 percent of total revenue that year.

NIO began to deliver the ES8, a seven-seater high-performance premium electric SUV, in June 2018. A total of 11,348 ES8 units were delivered within the year. The company then launched its second model, the ES6, a five-seater high-performance premium electric SUV, in December 2018, according to a report from Xinhua.

NIO also said in a statement that they will terminate their plan to set up a manufacturing plant in Shanghai. In 2017, NIO signed framework agreements with the government of Jiading district to build a manufacturing plant.

Now the company is developing and manufacturing cars with a partner, Chinese state-owned JAC Motors.

NIO’s termination of the Shanghai factory is related to the Tesla plant coming to Shanghai. As China’s blueprint for electric cars states, each city can only have one major electric car manufacturing plant to avoid excess supply and duplicated capacity, industry insiders said.

The Tesla Shanghai Gigafactory, the largest foreign-invested manufacturing project in Shanghai's history, broke ground in January. The factory is designed with an annual production capacity of 250,000 electric cars, including the Model 3, in the first stage. The new plant, Tesla’s first outside the United States, is located in Lingang, southeast Shanghai.

Meanwhile, a big batch of Tesla's Model 3 sedans arrived in Shanghai and Tianjin ports recently.

About 1,600 Tesla cars haven’t made it to the market as originally scheduled because they lack the necessary Chinese language security warnings. Tesla and Customs have negotiated a way to solve the problem as soon as possible, media reported.

William Li, founder, chairman and chief executive officer of NIO, said in the report that in 2019 NIO will focus on market penetration for its ES6 and ES8 variant products and services, Xinhua reported.