For NIO to thrive in uncertain waters, scale and cash flow matter.
NIO CEO and founder William Li has claimed that the company might turn a gross profit in 2Q of the year, and will keep ramping up the number gradually. Tesla (TSLA: NASDAQ) only became profitable after selling more than 100,000 cars, but NIO has sold no more than half of that number till now.
Cash flow issues remain the most critical mission of new car startups like NIO; why NIO chose the Hefei government is partly due to the government's fast decision-making speed, no requirement on factories in the short term, and its location next to Shanghai.
Li restated that Chinese domestic brands need to build their strengths in every aspect of service, product and production costs to survive and thrive. There are only three of them – Geely, Great Wall Motor and BYD – winning the game of making Internal Combustion Engine (ICE) cars, and the 'new forces' making Electric Vehicles in China will follow the same path.
Li stated the intention to continue working with its contract manufacturer JAC, signaling it has dropped the previous plan to build its own factory.