Nio, a Chinese electric vehicle champion saved by public support

With its futuristic-style electric vehicles, Nio is convincing more and more Chinese drivers (43,728 models sold in 2020) and even more investors: in the world’s largest automobile market, many predict that the local start-up has a destiny of the Tesla. In fact, Nio was the investment of the year: the title of the Chinese brand exploded, + 1,500% in 2020, to the point that it ended with a market value of nearly 100 billion dollars (82, 2 billion euros) on Wall Street, overtaking Daimler, BMW or General Motors to settle in the top 5 worldwide. In front of Nio, only Tesla, Toyota, Volkswagen and… BYD, another Chinese electric specialist since 1995, based in Shenzhen remain. Nio’s secret? It is all about the electric, a daring positioning on the top of the range, and a good dose of state support.

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A year ago, Nio was on the verge of bankruptcy. It’s not easy to create an automobile manufacturer from scratch. Between 2017 and 2019, the company, which presented itself as a future “Tesla killer”, sold only 32,000 vehicles, and lost $ 3.67 billion. Its development was thwarted by the market: in 2019, sales of electric vehicles fell by 4% in China.

And the competition is tough: hard for Nio to stand out, as China had 635 electric vehicle manufacturers in 2019. Certainly, most, attracted by generous subsidies, have never produced a single car, but such abundance promised painful consolidation for the Chinese market, as the government gradually lowered its subsidies. And Nio could have been a resounding bankruptcy. A year after its listing on Wall Street, in October 2018, the Nio share had fallen by 86%.

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This was counting without the support of the local government of Hefei, the hometown of founder William Li, where the company’s production lines are located. On the verge of bankruptcy, Nio obtains in April 2020 the equivalent of 7 billion yuan (890 million euros) by the capital of Anhui, a poor province west of Shanghai, and other state investors , on condition that it establishes its headquarters in the city. Since then, things have gone quickly: measures further restricting the purchase of thermal vehicles in large cities have worked in favor of Nio and other electric manufacturers.

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