As weird as it may seem, a car manufacturer does not necessarily need a manufacturing plant. Magna produced cars for other companies for decades already, and Foxconn and Geely want to do that as well. Nio is a good example: it outsources its production to JAC Motors. With its international expansion plans, it now wants twice as many cars from JAC per year: instead of 120,000, 240,000.
The contract these companies had was renewed from May 2021 up to May 2024. In the deal, Nio is responsible for way more than just asking JAC to make the cars. It has to develop and engineer them, as well as to take care of quality management and assurance and supply chain management. JAC is in charge of parts assembly and operations management.
Apart from getting paid for each car it manufactures for Nio, JAC also can use the regulatory credits from the production. Nio pays for the vehicles, taxes in manufacturing, and the amortization and depreciation of production machines. Both companies have a joint venture called Jianglai Advanced Manufacturing Technology (Anhui) Co, in which Nio owns 49 percent of the company.
By 2024, it is not unlikely that NeoPark will also be in full operation. If you have not heard about it yet, NeoPark will be a massive “smart electric vehicle industry park” that will include manufacturing and R&D (research & development) activities. The plans for it are that it will deliver 1 million EVs and 100 GWh per year when it is fully operational. We are not aware of the deadline for this goal, but we would bet it is by 2024.
Depending on how much demand Nio vehicles have in China and worldwide, the partnership with JAC should continue. The Chinese brand announced on May 6 that the first market for its cars abroad would be Norway. As expected, Nio cars will retain their capacity to swap battery packs in the Norwegian market.