NIO, a Chinese electric vehicle maker, received an investment of up to 1 0 billion yuan Beijing E-Town Capital, a state-owned firm. Qin Lihong, the company's co-founder, said that cars should be assembled like iPhones, promoting partnerships in making the cars.
The new investment received by the company is timely to the phase-out of electric vehicle subsidies in China. Nio announced on Tuesday that it entered into a framework agreement with Beijing E-Town Capital to establish a new entity, NIO China, in the Shanghai's economic-technological development area.
E-Town Capital is owned by the Beijing municipal government's economic development agency. The firm will acquire a minority stake in NIO China. Nio China will operate the automaker's China Business and it plans to launch yuan-based fundraising channels for the company.
The Ministry of Finance of China announced a new EV subsidy scheme in late March to control the overcrowding of electric vehicle makers in the industry. The effects of the cuts immediately affected the shares of many companies. On Tuesday, Nio's quarterly result is at its worse-than-expected decline in deliveries of the ES8 cars in April.
Chinese companies, including NIO, transform the auto industry in the country by partnering with the tech industry, like Tencent, a Chinese social media giant, and Baidu, a search service platform. During an interview with Quartz during the Shanghai auto show in April, NIO's co-founder Qin Lihong commented that manufacturing is only part of the value chain and he thinks that factory ownership doesn't matter.
He said that it is like Apple has iPhones but it doesn't make them, yet Apple has the best manufacturing capabilities. He emphasized that Foxconn built factories for them and it has the biggest capacity and manufacturing capability.
Mr. Qin promotes the partnership in assembling cars and he added that NIO needs to be an excellent organizer on the manufacturing side but it needs to also focus on developing the core technology and the user experience.
Many electric vehicle startups in China aren't getting licenses to manufacture their own cars because of the restrictions imposed by the government to curb overproduction. The companies, usually, form joint ventures with existing carmakers as they develop their own facilities on the backburner.
Nio has partnered with state-owned JAC Motors to produce its cars. The company develops the electric vehicle models at its car facility in Nanjing. The partnership covers the operating losses for JAC until 2021 for its factory that builds the electric SUVs for NIO.
