How NIO, a Chinese EV Startup, Rose, Fell and Rose Again

Until just a few years ago (WSJ) Chinese electric vehicle startup NIO was about to go bankrupt. But today it’s more valuable than the World Brand, General Motors Co Appearing as a measure of investors’ belief in Chinese Electric Vehicle (EV) initiatives; NIO returs back from the brink of Bankruptcy and rapidly becomes the world’s 4th largest automaker as-( Tesla INC, Toyota Motor Corp and Volkswagen AG are more valuable in terms of market value ) –promised and implemented a high-tech aotomotive revolution that was hard to reach for years Since its inception in 2014, NIO has led a group of Chinese EV startups that are of interest to investors looking for the next Tesla. During this time period, the limited and limited progress of some entrepreneur companies caused many investors to suffer, and they disappointed and were forced them to surrender  and lost their confidence. In 2019, there were more than 635 EV enterprises on paper in China, according to the government-sponsored NEV State Monitoring House, and the subsidies and private financing to them had evaporated. NIO seemed to be the most affected by these. The company NIO, known as the "Tesla Killer of China" in local media, sold 32,000 cars and closed it with a loss of $ 3.67 billion between 2017-2019. The NIO share value, which was 10 $ when it went public, fell to $ 1.39 at the end of last years CEO of NIO, William Li announced the biggest cause of the crisis,  began last year, when the US-China trade war started last year and  American investors were discouraged from subscribing to the NIO's 2018 public offering on the American Stock Exchange. The company was able to collect only half of the expected $ 2 billion. The battery "recall" of costly electric vehicles further strained the financial situation of NIO, bringing a surprise that reduced sales by another 4% in the Chinese electric car market in 2019. These declines followed the migration of senior executives, with less than 7,500 staff at NOI's global headquarters in Shanghai Headquarters. This included job losses at American offices in San Jose and California. But according to Li's words, despite all these negativities, NIO had greater advantages over other entrepreneurs. He was selling vehicles. In the fourth quarter of last year, car sales reached 8000 units and a cash flow of 400 million $ was provided. Li, 46, said that this funding source was very important to them and that there were no other cash channels. But after all, auto analysts were of the opinion that the NIO would find an urgent white knight. Finally, the government of NEFEI, a city in ANHUI, Mr. Li's hometown, came to the rescue and became NIO's Knight white Created a financing package of 683 million $  with NIO. Mr. Li immediately reported this funding inflow to investors, stating that he saved the NIO and increased its reliability. It stopped the decline of the share prices and enabled the value of the shares to exceed 57 $ Although TESLA was well below the value of 555 billion $, NIO's market value reached approximately $ 73.6 billion as of last Friday, November 25. Apart from the efforts of the NIO on its own, Tesla's production enabled the revival of the Chinese electric car market, according to the China Passenger Vehicle Association. In the six months until October, TESLA produced and sold more than 72,000 new 3 Model Sedans locally. Thanks to Tesla, other EV companies have also accelerated. NIO sales exceeded 24,000 in the last six months, and monthly sales in October also exceeded 5,000 for the first time. Like Mr. Musk, Mr. Li, the son of a humble farmer family, has founded more than 40 companies. Mr. LI is generally a plain looking guy with polo shirts, jeans and sneakers. Mr. Li, who studied sociology and was more successful in computer science courses, is today described as someone whose fortune exceeds 8 billion$ according to Forbes Magazine. Mr. Li said that their monthly sales target from January is 7,500 units, and they continue to contract manufacturing in Hefei. He announced that next year, their goal is to sell vehicles to Europe and the USA. Tesla, NIO and other EV vehicle manufacturers aim to leave behind hours of charging times with a battery replacement that will turn them into a few minutes. While the battery replacement process prevents many consumers from purchasing EV cars, NIO has built and installed 162 battery swap points that are costly. Finally, he stated that their aim is to continue the sale of the NIO ES6 sports utility vehicle without batteries, thus reducing the price from 52,200 $ to 41,600 $ with this option to accelerate the sale and to provide convenience to the drivers by renting a battery of 150 $ per month. Mr. Li stated that 1/3 of the buyers choose this option and sales are currently ongoing. There are still rhetoric against NIO. For example, the vendor Citron Research. NIO share prices continue to rise, despite the fact that NIO's share values are extremely high and the Chinese Electric Vehicle initiatives are described as an exciting "mania". Mr. Li advocates his Company's high evaluation of NIO compared to traditional automakers. Although traditional car production is much more compared to Electric vehicles; It is getting harder, day by day for nut and bolt manufacturers to “adapt to an era where the car is defined by software”.   Source: Wall Street Journal by Trefor Moss You may also like:

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