NIO Resolving Slow Growth of EV Production Capacity

William Li, the co-founder and CEO of Chinese electric vehicle firm NIO, answered audience questions during the opening ceremony for a NIO Center in Dongguan, Guangdong Province on November 27, offering insight regarding user experience, supply chains, production capacity, and recent progress of the firm’s mobile phone business.

Regarding one question on why consumers choose NIO, Li said that for the potential buyers of traditional luxury brands such as BMW, Mercedes-Benz, and Audi, there is still a big gap between them and NIO in terms of products, services and experiences. 73 out of 100 Chinese buyers of pure electric vehicles worth above 400,000 yuan ($55,464) have chosen NIO, claimed Li.

Although Li is full of confidence in NIO‘s advantages, the sales volume this year did not seem to meet expectations. From January to October this year, NIO delivered only 92,400 new cars, which basically means that it could not achieve the annual delivery target of 160,000 cars set at the beginning of the year. The sales volume in October even showed a month-on-month decline.

In October of this year, NIO‘s two factories were shut down at key sites where the new ET5 model saw sales growth due to the pandemic, which caused a great impact on its monthly delivery volume.

Li said that NIO‘s strategy was to meet different market demands with more models, which conflicted with the complicated supply chain situation, and also determined that NIO would not focus on the delivery of new cars in a single month. The firm has sent dozens of employees to help partners solve the problem of capacity increasing.

NIO says it has gone to great lengths to ensure production capacity and reduce the continued impacts of the pandemic in China. Li said that he went to a factory after quarantine measures were lifted in early November, and that more than 3,000 staff members had lived inside the facility during the closed-loop production period.

Although NIO‘s business strategy tends to involve the launching of more models, when asked by an audience member whether it will follow the current trend to launch electric MPV models, Li said no. Despite this demand, NIO says it has no plan to produce an MPV for a long time.

Regarding the progress of NIO‘s mobile phone business, Li said that the firm has set up related R&D teams in Shanghai and Shenzhen, and that development is progressing smoothly. Li suggested that consumers who need to change their phones within a year can wait for NIO‘s mobile phones.

SEE ALSO: NIO’s Q3 Revenue Up 32.6% YoY, Five New Cars to Be Unveiled Next Year

According to previous tips, NIO‘s high-end phone with a price ranging between 5,000 and 7,000 yuan will be officially released as soon as next year. Li said that it will have more “smart playing methods” related to the company’s cars.

During an October interview, Li said that NIO would not spend 16 years to achieve profitability like Tesla. He added that it has not been made public when the firm will make a profit, but he hoped to break even in 2024. The pandemic and rising prices of raw materials have caused NIO to lose billions in gross profit, but the company still invested heavily in R&D, hoping to increase sales. At present, its R&D investment in a single season has remained above 3 billion yuan, mainly concentrated in the fields of chips, mobile phones, sub-brands and batteries.