Financials , Automotive , Healthcare Author：Linyan Feng Jul 16, 2019 06:35 PM (GMT+8)

NIO is seeking a deal with investors that would invest billions of yuan in its spin-off NIO Power. It highlighted the challenges of delivering EVs amid fierce competitions from local rivals like Xpeng Motors and WM Motor, and phasing-out subsidies in China.

NIO Power station. Credit to NIO

NIO is seeking a deal with investors that would invest billions of yuan in its spin-off NIO Power, according to China’s industry innovation platform iyiou.com.

NIO’s founder and CEO Li Bin (李斌), co-founder and President Qin Lihong (秦力洪), Vice President of NIO Power Shen Fei (沈斐) lead the deal and plan to launch a new NIO Power App in two months. The project needs a new name but the ultimate choice is uncertain right now. Thousands of employees are involved in it, the website reported.

The spin-off will have five product lines: supercharger station, power van, battery swap, "one click for power", and charger map. NIO Power operates in major metro cities in mainland China already and has most of the functions that the new NIO Power “will” have.  NIO opened its "one click for power" service to facilitate EV charging consumers in April.

NIO declined to comment, iyiou.com said.

 Li Bin has put forward the mission of providing a charging experience that is comparable with refueling for EV owners, or even beyond. NIO invested in approximately CNY 2 billion (USD 290 million) to date, according to the website. For the record, the company generated CNY 1.6 billion revenue and lost CNY 2.65 billion (USD 390 million) in the first quarter of the year.

Wary of the company’s steep losses (though, the size was decreasing compared to the fourth quarter of 2018) can be the main driver that pushes NIO executives to spin the project off and seek outside investment. Delivery volume sent a dim sign for the firm, as well. It sold 3,553 cars in the second quarter of 2019, decreasing from last quarter’s 3,989 units. NIO has never achieved its peak in the last quarter of 2018, with 7,980 units sold. 

China reached 300,000 public EV chargers in the second half of 2018, representing more than 50% of the global public EV charger market, according to Bloomberg. The country aims more: 12,000 charging stations and 4.8 million charging piles by 2020, according to regulator The National Development & Reform Commission.

Charging station market is expected to grow to CNY 184 billion (USD 26.8 billion) in 2020, calculated from the data above.

Loss-making and high-profile firms such as DiDi Chuxing and Uber were reportedly in talks with investors to raise capital for its self-driving units successively. It is not a rare thing for a tech company that aims at trimming operating costs and containing losses to follow. Still, it highlighted the challenges of delivering EVs amid fierce competitions from local rivals like Xpeng Motors and WM Motor, and phasing-out subsidies in China.

NIO's latest move to enter into a new battlefield is eye-catching but risky. Incumbents are out there: Xiongan Lianxing Network Technology set by State Grid Electric Vehicle Service Co, China Southern Power Grid, and others;  CAMS New Energy Technology Co.,Ltd (CAMS), a new joint venture that focuses on EV charging business set by Volkswagen Group China, FAW Group, JAC Motors and Star Charge, a China-based EV charging infrastructure manufacturer.