The qualification to make cars was approved, and through the acquisition of JAC Assets, it had its own factory, and the new tail label was used for the delivery of new vehicles...... After nearly 8 years of OEM struggling with JAC, NIO finally won the independent production qualification.
Judging from the content of the car picked up by NIO users on social media recently, the tail mark of NIO's new car has changed from "JAC" to "NIO". This means that NIO has completed the production line switch, no longer uses the production qualification of JAC, but has begun to deliver new cars in the name of NIO.
NIO did not respond to the question of car manufacturing qualifications. The relevant person in charge of JAC responded that JAC and NIO will continue to cooperate, but the cooperation will not be in OEM, but in other fields, such as cooperation in the field of battery swapping.
Objectively speaking, for JAC, at the critical moment of cooperation with Huawei, it is not a bad thing to recoup funds by selling part of its assets.
After 8 years of foundry, NIO won a qualification
Previously, through the acquisition of JAC assets, NIO already had its own factory.
In October 2023, JAC Motor announced that it intends to transfer assets through public listing, and intends to transfer some assets, including buildings, construction in progress, land use rights and inventory, fixed assets, and structures and equipment of the Xinqiao plant at a price of 4.5 billion yuan.
In December of the same year, the credit information management system of the Ministry of Industry and Information Technology of the People's Republic of China showed that NIO Automotive Technology (Anhui) Co., Ltd. obtained independent production qualifications, and its production address was No. 299, Baita Road, Economic and Technological Development Zone, Hefei City, Anhui Province. NIO said in the announcement of the Hong Kong Stock Exchange that it will acquire the production equipment and assets of JAC's first advanced manufacturing base and second advanced manufacturing base.
On December 5, NIO, which won the independent production qualification, acquired part of the factory assets of JAC Automobile at a consideration of 3.158 billion yuan.
At that time, the Ministry of Industry and Information Technology (MIIT) announced the "Announcement on Road Motor Vehicle Manufacturers and Products" (batch 378), in which a total of eight models of NIO ES8, ES7, EC7, ET7, EC6, ES6, and ET5 (ET5T) were unveiled. The declaration map at that time showed that the tail mark of the Weilai model had changed from the word "Weilai" to "JAC". This shows that NIO no longer relies on JAC OEM and has begun to deliver new cars with its own production qualifications.
According to industry insiders, after NIO obtains the independent production qualification, while realizing the transition from the OEM model to independent production, the industrial chain of NIO's R&D, production, and sales will also form a closed loop.
What does it mean to no longer rely on JAC foundry?
According to the past experience of the automotive industry, there are three ways for new brands to obtain production qualifications, including cooperating with qualified car companies, acquiring qualified enterprises, and applying independently.
In December 2018, Li Auto acquired 100% of the shares of Lifan Automobile, and in March 2020, Xpeng Motors acquired 100% of the shares of Foday Automobile, both of which obtained independent production qualifications. Of course, before getting the qualification, Xpeng Motors and Li Auto also took the OEM route. It's just that among the three mainstream new car-making forces in "Wei Xiaoli", Weilai is the latest to obtain the car-making qualification.
The OEM cooperation between NIO and JAC can be traced back to 2016, when JAC and NIO signed a strategic cooperation framework agreement, and the two parties integrated superior resources to build an advanced manufacturing base for JAC NIO. In Li Bin's opinion, the cooperation after that made sense, Li Bin even said, "Porsche's factory is not as good as JAC's factory."
In March 2021, NIO also deepened its cooperation with JAC and jointly established Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd. In April of the same year, 100,000 new energy vehicles at JAC's advanced manufacturing base successfully rolled off the assembly line, setting a record for the fastest in the industry. It was not until the end of last year that the OEM cooperation with JAC was ended.
So, why did NIO's qualification come so late and choose to break the cooperation at this time and independently apply for the car-making qualification?
For the new car-making forces that were extremely "money-burning" in the early days, the OEM model saved them a lot of money. But at the same time, the disadvantages of foundry are also obvious, and "Wei Xiaoli" has encountered capacity problems due to foundry.
OEMs are often constrained by the production and quality control capabilities of traditional automotive companies. Li Bin of NIO has previously revealed that if NIO's cars are made entirely by itself, the manufacturing cost will drop by 10%.
In terms of products and production, NIO's successful acquisition of factory and car manufacturing production qualifications will help control product quality, cost and production scheduling, and make it more autonomous. In terms of production capacity, NIO will control the production process more accurately to avoid the problem of loss of orders due to insufficient production capacity.
In addition, at the beginning of last year, the Ministry of Industry and Information Technology issued a document pointing out that both foundries and new energy brands need to have production qualifications in order to mass-produce new energy vehicles. As the state becomes more and more strict in the control of the OEM model, obtaining the production qualification has also eliminated the worries for NIO. Although the capital cost has increased by 3.1 billion yuan, after winning the production qualification, it represents that NIO has crossed a hard threshold in the process of car manufacturing.
After "breaking up" with NIO, JAC could only rely on Huawei to go ashore
Looking at JAC again, from cooperation to "breakup", the OEM cooperation with NIO can also be regarded as a gain.
According to statistics, from 2018 to 2022, NIO paid 223 million yuan, 441 million yuan, 532 million yuan, 715 million yuan and 1.127 billion yuan in OEM fees to JAC Motors, with a cumulative total of about 3.038 billion yuan, which is close to the cost of acquiring JAC Motors' factory. For JAC, OEM for NIO is also a lot of income.
The sale of some assets can be regarded as a cash return for JAC and a financial guarantee for cooperation with Huawei and Volkswagen.
In 2017, JAC and Volkswagen each invested 50% in the establishment of a joint venture JAC-Volkswagen. After that, Volkswagen acquired 50% of the shares in JAC, taking control of JAC Volkswagen with a 75% advantage, and JAC Volkswagen was renamed Volkswagen (Anhui) Co., Ltd., and JAC lost control of the joint venture.
After the cooperation with Volkswagen was taken away from the initiative, JAC also began to cooperate with Huawei. This cooperation is also considered by the industry to be a cooperation that sells the "soul".
In December 2023, Jiangqi Group and Huawei officially signed a strategic cooperation agreement, under which the two parties plan to cooperate in product development, manufacturing, sales, and service to build luxury intelligent connected electric vehicles. On March 26 this year, Jiangqi and Huawei signed a memorandum of cooperation to start the development of HarmonyOS native applications based on OpenHarmony.
In the same month, the Anhui Provincial Department of Ecology and Environment publicized the "Environmental Impact Report on the Construction Project of JAC with an Annual Output of 200,000 Medium and High-end Intelligent Pure Electric Passenger Vehicles". According to the report, JAC will build two pure electric platforms (DE and X6), one is to focus on building a new new energy exclusive platform (DE platform) to meet the needs of the domestic economy and improvement market, and the products cover sedans, SUVs and MPV models. The second is to strengthen strategic cooperation and develop a new luxury new energy platform (X6 platform) with the help of Huawei's intelligent technology to seize the high-end domestic market.
At the recent Huawei Hongmeng Ecosystem Spring Communication Conference, Yu Chengdong also announced the upcoming cooperation with JAC Hongmeng Zhixing's fourth "realm". It is reported that the smart car brand cooperated by Huawei and JAC is called "Aojie", and the first smart model is expected to be launched in the fourth quarter of this year.
According to the production and sales forecast, in the next five years, JAC's passenger car sales will exceed 500,000 units. Among them, the new DE and X6 platform products will achieve a production and sales scale of more than 200,000 units. On April 16, the exterior and interior pictures of JAC's high-end new energy vehicle base were also exposed.
In this way, the cooperation with Huawei may be the focus of JAC's next business development. Therefore, the transfer of some assets with 4.5 billion yuan is also crucial.
In terms of performance, JAC Automobile has released a performance forecast on January 30, and it is expected to achieve a net profit attributable to the parent company of about 136 million yuan in 2023, which will turn losses into profits, and it is expected to achieve a non-net profit attributable to the parent company of about 1.55 billion yuan in 2023, which has not yet achieved a turnaround.
The main reason for the weak hematopoietic ability is naturally related to poor sales. For the whole year of 2023, JAC will achieve sales of 592,500 units, including 189,500 pure electric passenger vehicles, a year-on-year decrease of 3.71%. According to the latest production and sales report, the cumulative sales volume of JAC in the first quarter was 106,800 units, a year-on-year decrease of 5.52%. Among them, the sales volume of JAC passenger cars was 38,800 units, accounting for nearly one-third of the total sales, and the sales of new energy passenger vehicles totaled 5,626 units, a year-on-year increase of 49.19%
JAC is also heavily dependent on government subsidies. On March 30, JAC issued an announcement on obtaining government subsidies, and as of March 28, 2024, the company and its subsidiaries have received a total of 177 million yuan of government subsidies related to revenue.
In the crazy new energy vehicle industry, if you want to survive successfully in the gladiatorial fight, it is naturally not a long-term solution to rely on OEM for others. For JAC, the loss of OEM binding with NIO is not a good thing, prompting JAC to have to work brand, product, and marketing to fight bayonets. Therefore, the new brand in cooperation with Huawei will become JAC's next important bet, whether to go ashore or not, in this move.