Electric vehicle (EV) manufacturer Nio has abandoned plans to build a manufacturing plant in Shanghai, while reporting losses of $1.4 billion in 2018.
The company said on Tuesday that it would focus on the “joint manufacturing model in the long-term.” Nio’s vehicles are currently produced in partnership with state-owned JAC Motors in the eastern Chinese city of Hefei, which the company claims will support its growth plans for the next two to three years. The Shanghai-based EV firm previously expected to finish construction on its own factory in Shanghai’s Jiading District by the end of 2020.
The company did not elaborate when reached for further comment by TechNode.
Nio made the announcement in its latest financial results. The EV manufacturer reached revenues of $720 million for the financial year, although its losses almost doubled compared to 2017.
Nio said it experienced a “greater than anticipated slowdown” during the first two months this year. The company expects this to continue, with projections that first-quarter deliveries of its flagship ES8 SUV will fall by more than 50% compared to the previous quarter. Aside from the ES8, the company launched a more budget-friendly SUV, the ES6, in December.
Nio, which went public on the New York Stock Exchange in September, currently does not have an electric vehicle manufacturing license. In its listing documents, the firm said it hoped the plant would increase its chances of acquiring the permit.
Nio abandoning its Shanghai factory comes as competition in the electric vehicle industry heats up. US EV manufacturer Tesla last week slashed the prices its vehicles, with variants of its Model X seeing a RMB 341,100 (around $51,000) price cut. Meanwhile, the US company is building its first overseas manufacturing plant in Shanghai.
Nio’s ES8 has been touted as a competitor to the Model X. However, Nio also lacks Tesla’s brand image, a shortcoming the Shanghai-based company acknowledged in its IPO filing, saying that it faces significant challenges as a new entrant to the industry.
Correction: This article has been corrected to reflect that Nio’s revenues were $720 million for the financial year and not $702 million as previously reported.