Nio wants to take over JAC’s factories in China

Nio is considering the move to over both factories operated jointly with the state-owned Jianghuai Automobile Group (JAC) and apply for its own production licence. It is undisputed that JAC wants to sell some of its factories.

The two plants are the F1 and F2 production facilities in Hefei, where Nio’s electric cars are manufactured. JAC announced last week that it would sell part of its assets in the factories – specifically almost 4.5 billion yuan (currently 580 million euros).

According to local media, citing an insider, Nio could take over these assets and apply for its own production licence in order to move from contract manufacturing to independent manufacturing and thus achieve greater autonomy.

According to JAC, its own decision “will not affect Nio’s business and manufacturing activities”. Nio itself would only comment on the matter “in due course”, writes Car News China. The portal National Business Daily subsequently quotes a person familiar with the matter as saying that Nio itself wants to take over the shares.

“If Nio can obtain independent production qualification as a result, it will be a major positive thing for it, which will benefit the company’s long-term operation and efficiency,” the person said. In China, production approval from the National Development and Reform Commission (NDRC) is required to manufacture and sell vehicles. In the case of Nio vehicles, this approval has so far been with JAC and not Nio itself.

How exactly Nio plans to finance the possible takeover is not clear from the Chinese reports. The company already has high expenditures for research & development as well as for building up its Power Swap Stations for quick battery changes.

Nio already had plans for its own production in the past (at times in Beijing, at times in Shanghai), but these plans were never implemented due to the lack of money. When the company was in dire financial straits a few years ago, financiers from Anhui province stepped in – including a deal for contract manufacturing at JAC, which is also based in Anhui. Since then, all Nios have been manufactured by JAC, and the agreement was extended in 2021 until May 2024.

The first JAC factory for Nio production is called F1 and has been manufacturing the brand’s electric cars since 2017. In 2021, the Neo Park industrial park was established, where the F2 factory has been built. The F2 factory manufactures the Nio ET5, which is also offered in Europe.

carnewschina.com, cnevpost.com, nbd.cn (in Chinese)