Nio Plant Venture Lands $1.5 Billion Investment

Chinese electric-car startup Nio Inc. is forming a manufacturing joint venture with Beijing E-Town International Investment and Development Co., which is investing 10 billion yuan ($1.5 billion) in the business.

The partners aim to find additional backers to help finance a new assembly plant to support Nio’s growth. Earlier this year the startup abandoned the idea of erecting its own assembly plant in Shanghai after posting a hefty 2018 fourth quarter loss. This week the company announced preliminary first quarter results, which showed another 2.7 billion yuan ($390 million) in red ink.

Nio, which was founded in late 2014 as NextEV, debuted its first EV, the $68,000 ES8 crossover, in China at the end of 2017. The company is now launching the smaller ES6 crossover, which will start at $53,300. Nio also unveiled the ET7 sedan in concept form at last month’s Shanghai auto show.

The company says it has 12,000 preorders for the ES6. But deliveries of the ES8 fell more than 50% to fewer than 4,000 units in the first quarter compared with 2018 levels. Second-quarter sales are expected to shrink further.

Nio attributes the first quarter loss to reduced subsidies for electric cars, an overall slowdown in China’s economy and the damping effect of ongoing trade tensions with the U.S.

Nio currently outsources vehicle production to Anhui Jianghuai Automobile Group. But the startup says it needs its own facility to launch a production version of the ET7 electric sedan, which will ride on an all-new platform. In the meantime, the company plans to focus on its two existing models and a third crossover vehicle that will share a platform with the ES8 and ES6.