Electric vehicle (EV) manufacturer Nio has received approval to construct its third factory in China, signaling a significant milestone that would escalate its approved production capacity to 1 million cars annually, nearly matching Tesla’s colossal Shanghai plant. Three sources familiar with the matter disclosed this development.
Tesla, with its Shanghai plant capable of producing 1.1 million vehicles per year, stands as the largest manufacturing hub for the company globally.
The recent approval for Nio’s third plant, with an annual capacity of 600,000 units, represents a substantial achievement for the company, especially considering China’s cautious approach towards approving new EV production projects since 2022 amid concerns of overcapacity and slowing demand. Nio obtained an auto manufacturing license late last year.
Construction of the third plant, known as F3, has commenced in Huainan city, located in the eastern province of Anhui. However, the exact commencement date for mass production from the site remains undisclosed, according to the sources, who spoke on the condition of anonymity as the matter has not yet been made public.
The F3 plant is expected to primarily manufacture vehicles for Nio’s newly introduced affordable car brand, Onvo, the sources added.
In response to inquiries, Nio informed Reuters that construction of the third plant had begun, with a capacity of 100,000 units on a one-shift basis. The expansion initiative aims to cater to the growing demand for Nio- and Onvo-branded cars and facilitate the production of newly launched vehicles, the EV maker stated.
Nio’s decision to launch the Onvo brand in May coincided with the unveiling of the Onvo L60 SUV, priced starting at 219,900 yuan ($30,300). This move underscores Nio’s strategy to diversify its customer base and bolster sales with more affordable models amidst intense price competition in China’s EV market.
The approval of new EV production capacity by regulators comes amidst global apprehensions about overcapacity in China’s EV industry. Nio’s founder and CEO, William Li, has defended the industry, refuting claims of overcapacity and asserting that foreign brands have faced market share decline in China primarily due to product and service competitiveness issues.
While Nio faces challenges in optimizing factory utilization rates compared to its peers, the company remains steadfast in its commitment to meet market demand and enhance its competitive position in the rapidly evolving EV landscape.
