China’s top economic planning agency has blocked homegrown electric vehicle maker Nio from building its own manufacturing facility in Shanghai, as enforcement of new rules aimed at curbing overcapacity in the auto sector kick in.

The decision not to allow Nio to follow through on previously announced plans to build its own car factory in Shanghai effectively means Nio may have to wait in line until rival Tesla’s plant in the city reaches capacity.

An industry source told TechNode that the National Development and Reform Commission (NDRC) stopped Shanghai authorities from approving the plant. The city will have to wait until Tesla, which recently began construction on its own factory in Shanghai, has reached production capacity before it can approve other manufacturing sites, according to the source.

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Chris Udemans

Christopher Udemans is a Shanghai-based technology reporter. He covers Chinese artificial intelligence, mobility, and cybersecurity. You can contact him at chrisudemans [at] technode [dot] com.