And it was a major boost for Tesla to launch Tesla Giga Shanghai.

In a long and very interesting interview, William Li (Li Bin) - the founder and CEO of NIO - has told the story of the "perfect storm" that almost broke the company.

Around 2019, NIO was struggling with finances. Heavy losses, combined with insufficient funds and inability to attract investors, and an IPO smaller than expected (partially due to U.S.-China tensions) and on top of that, a battery recall.

It was a very challenging time. NIO was forced to give up its plan to build its own electric car factory in Shanghai, despite the fact that it received from the local government even stronger support than Tesla, according to William Li.

"The money is not in place, so we have to postpone the construction of the Shanghai factory. As a result, the outside world interpreted that Shanghai did not support us. Shanghai has always supported us, and the policy it gave us was even better than Tesla." - via Google Translate

At the time in 2019, NIO had an expensive press line (ordered about a year earlier) ready to pick up and install, but the plan to build the plant was scrapped.

NIO decided to sell the manufacturing equipment to Tesla, which was building Tesla Giga Shanghai and intended to expand in China as quickly as possible. This deal basically saved NIO, which produces its own cars at the JAC-NIO production base in Hefei, China.

"In the most difficult months, Wei Lai sold the ordered production equipment to Tesla's Shanghai plant, and Li Bin checked the cash situation with several executives every night. At that time, almost no investors were willing to help, and some of the earliest institutions that invested in Weilai also emptied Weilai’s stock." - via Google Translate

Tesla Giga Shanghai - Model Y Stamping (Tesla Q4 2020 report)
Tesla Giga Shanghai
Tesla Giga Shanghai - Model Y Die Cast (Tesla Q4 2020 report)
Tesla Giga Shanghai

William Li explains that they would normally not sell the equipment to Tesla, because it's like "selling weapons to competitors." but they were the only ones that were building a new plant.

For Tesla, it was a major boost, because you need 12-18 months to buy such equipment and thanks to redirecting it, Tesla saved at least half a year.

"We have ordered a lot of long-term equipment. We sold the press line equipment of Tesla's Shanghai factory, which is equivalent to selling weapons to competitors."

"Only it is building a factory, it has to be in a hurry. If someone else buys it, then I will definitely not sell it to them. This equipment was booked by us at half the price in early 2018. The equipment’s reservation cycle is 18 months. It has already arrived at the customs and can be used immediately. It took a long time for Tesla to book again, and I saved it at least six or seven months. So it was bought."

"They also don't know. Actually, if he doesn't give us the money, I might really not be able to take it off. Help each other." - via Google Translate

It was definitely quite a ride for NIO in 2019, which in 2019/2020 culminated with COVID-19 in China (before spreading globally).

Fortunately for NIO, the company rebounded in 2020, introduced its third model - NIO EC6 and announced the NIO ET7.

The sales results are gradually improving, so we can assume that there is a big chance to return to a position of planning its own plant again, for the next-generation EVs.

The story explains also how Tesla was able to proceed in China so quickly.

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