Nio achieves independent vehicle production, poised to buy JAC assets

Max McDee, 04 December 2023

Chinese electric vehicle manufacturer Nio has been awarded independent vehicle production qualifications, signaling a new chapter in the company's journey. This allows Nio to produce vehicles under its own name, rather than relying on partner qualifications.

Nio, a prominent player in the world of electric cars, has long been producing its vehicles under the qualification of Anhui Jianghuai Automobile Group (JAC). However, the latest government filing reveals that Nio has now entered China's Ministry of Industry and Information Technology's Vehicle Manufacturing Enterprise Credit Information Management System, allowing independent production.

Nio achieves independent vehicle production status, poised to buy JAC assets

This development is not just a bureaucratic milestone; it has the potential to reshape Nio's manufacturing landscape and its impact on the electric vehicle industry.

For several years, Nio relied on JAC's qualifications for vehicle production. This arrangement saw Nio vehicles being manufactured at two factories in Hefei, China – the F1 plant, officially opened in 2018, and the F2 plant, commissioned in September 2022. However, the Chinese government requires local automakers to have qualifications issued by the National Development and Reform Commission to produce vehicles under their own brand names. Nio, until now, lacked such qualifications.

In a bid to control capacity, Chinese regulatory authorities imposed restrictions on vehicle production even before Nio's establishment in 2014. This prompted Nio to partner with JAC and subsequently form a joint venture called Jianglai, responsible for the manufacturing process of Nio vehicles as a whole.

Nio achieves independent vehicle production status, poised to buy JAC assets

Nio's Vice President for Manufacturing Business, Ji Huaqiang, pointed out in a recent interview that before 2019, JAC handled the production of Nio vehicles. Later, with the establishment of Jianglai on March 31, 2021, Nio took a 49 percent ownership stake, increasing it to 50 percent in April 2022.

Recent developments suggest that Nio may soon announce the acquisition of factory assets being transferred by its partner, Anhui Jianghuai Automobile Group (JAC). JAC had previously announced plans to transfer billions of yuan worth of factory assets, including Nio's F1 and F2 plants in Hefei.

These developments have fueled speculation that Nio could acquire these assets to go with its own electric vehicle production status. While Nio has not officially confirmed these reports, industry observers are closely watching for an official announcement.

Nio achieves independent vehicle production status, poised to buy JAC assets

The assets in question have a net book value of RMB 4.2 billion ($590 million) and an appraisal value of about RMB 4.5 billion, according to JAC's October announcement.

If Nio successfully acquires the factory assets after securing the independent vehicle production status, it could have far-reaching implications. Nio would be able to fully own the two factories it had previously built in partnership with JAC. This would grant Nio greater control over its production processes, potentially leading to increased efficiency and cost savings.

This move could strengthen Nio's position in the competitive EV market, allowing the company to produce vehicles under its own brand name, free from the constraints of relying on partner qualifications. Wall Street analysts are likely to closely monitor these developments, especially as Nio is set to announce its third-quarter unaudited financial results.


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