Nio leaves joint-venture with Hycan Automotive Technology

25 August 2022

Hycan Automotive Technology was a joint-venture set up between GAC Group and Nio, formerly known as GAC Nio. It was set up in April 2018 and its main purpose was to manufacture electric SUVs under the new brand.

At the start of the joint-venture, Nio owned 45% stake of the newly formed company. At the beginning of 2021, the CEO of GAC Nio Liao Bing left the company, his departure was shortly followed by the CEO of Nio, William Li. The GAC NIO announced an additional funding round and it secured CNY 2.4 billion from Guangdong Zhutou Intelligent Technology which in return took a controlling 68.56% stake in the JV.

As a result, Nio’s stake was diluted to only 4.46%. Change of name followed and the GAC Nio was rebranded as Hycan Automotive Technology.

The company planned to sell 15,000 vehicles a year but it only managed to sell less than 1,000 Hycan 007 models in 2019. The SUV is priced at CNY 262,000 ($37,350) and essentially is a slightly redesigned Aion LX. The second model from Hycan is called Z03 and just like its bigger sibling, is a redesigned Aion Y.

Nio must have been disappointed with the progress and dismal sales numbers and decided to go its own way. The company announced it was setting up a new, entry level brand with cars starting at $15,000. The new, budget friendly brand is joining Nio and ALPS as the company focuses on diversifying its offerings.

As it was to be expected, Nio decided to eventually pull out of the joint venture. Hycan announced that Nio has officially withdrawn from the list of its shareholders. Current sales numbers from Hycan aren’t painting a bright picture really - in July the company managed to sell 444 of the smaller Z03 and only 7 of the bigger Hycan 007.

Nio was involved in another joint-venture with Changan Automobile, called Changan Nio, where it held 45% stake. In May 2021 the name was changed to Avatr Technology Nio was replaced by Changan, Huawei and CATL as a stakeholders.

It seems Nio is focusing on its own brands as the joint-ventures it was involved in did not deliver results it was expecting. The Chinese market is facing turbulent times at the moment - due to unprecedented drought many factories have to slow down and ration electricity, this is affecting all manufacturers across the country.

Covid restrictions are still in place and are having a huge impact on the supply chain and to top it off, customers are slowing down with their purchases, worrying about the general state of the economy. NIO’s move to pull out of joint ventures and focus on developing its own brands seems like a smart choice.

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