BEIJING — Once on the brink of bankruptcy, one of China's largest electric car makers is pressing ahead with plans to expand to Europe and beyond.
Nio, which listed in the U.S. nearly two years ago, is arguably China's closest competitor to Tesla. Shares of the Chinese start-up plunged more than 80% from their highs last year as financial troubles mounted. Since its public offering on the New York Stock Exchange, several executives, including one of the founders and leaders for Nio in the U.K. and the U.S., have left, in addition to many layoffs.
Then in the middle of the coronavirus outbreak, Nio announced funding talks with the government of Hefei city in southeastern China that later resulted in a lifeline of 7 billion yuan ($1 billion) from investors, including state-backed entities. Meanwhile, vehicle deliveries hit a record 3,740 in June and topped 10,000 for the second quarter overall, according to Nio. Shares are up more than 240% so far this year.
"We hope in the second half of next year we can begin making some preliminary attempts in some countries that are more welcome to electric vehicles," William Li, founder and chairman of Nio, told reporters on Thursday. That's according to a CNBC translation of his Mandarin-language remarks.
"We hope to begin with Europe," Li said. He declined to name specific countries, but said preparations are already underway for Nio's plan to enter major global markets by year 2023 and 2024.
The company still has about 200 people working in its U.S. office, down from the roughly 600 at its peak, according to Li.
Nio still has a long way to go with its global ambitions if it is to match the scale of Elon Musk's Tesla.
In the second quarter alone, Tesla delivered more than 90,000 vehicles worldwide. Nearly one-fourth of revenue in the three months ended June 30 came from China at $1.4 billion, while about half came from the U.S. at $3.09 billion.
Musk also has his eye on Europe. After expanding operations in China with a new factory in Shanghai, the second gigafactory outside the U.S. is set for Berlin.
Tesla's stock has climbed more than 378% this year and topped $2,000 a share on Thursday ahead of a five-for-one stock split for stockholders of record on Aug. 21.
Nio shares closed about 2% lower on Thursday at $13.78 each.
The economic shock of the coronavirus pandemic hit a Chinese auto market already struggling from a months-long slump in sales. Automobile sales in the first seven months of the year fell 12.7% from a year ago, with that of new energy vehicles falling 32.8%, according to the Ministry of Industry and Information Technology.
New energy vehicles, which include pure electric and hybrid cars, posted their first sales increase for the year in July, up 19.3%, the ministry said.
China is the largest automobile market in the world. Beijing has national ambitions to become a global leader in new energy vehicles, while the auto industry overall plays a significant role in the nation's economy. Soon after the coronavirus outbreak subsided within the country, Chinese authorities announced new policies to support the auto and electric vehicle industries.
Some of the start-ups that have survived the initial flood of electric vehicle development are also looking to U.S. capital markets. Li Auto listed on the Nasdaq a few weeks ago, while Alibaba-backed Xpeng also filed earlier this month for an initial public offering on the New York Stock Exchange.
The Chinese government is now also allowing companies to sell electric vehicles without a battery, paving the way for Nio to launch a "battery-as-a-service" product on Thursday. The subscription plan reduces the upfront vehicle cost, and can be compared to a regular gasoline charge, Li said.
Customers who buy the battery plan — which costs a minimum of 980 yuan ($140) a month — can get a discount of 70,000 yuan ($10,000) from a Nio car purchase. The company announced last month its latest model, the EC6, is slated for delivery in September with a pre-subsidy starting price of 368,000 yuan ($52,571).
To support the new battery product, Nio formed a new battery asset company in Wuhan, China, whose three other investors are: the leading battery developer Contemporary Amperex Technology (CATL), Hubei Science Technology Investment and financial services company Guotai Junan International. Each company is investing 200 million yuan and will have a 25% equity interest.
Nio's Li said the battery service plan should give drivers of gasoline cars more motivation to switch to electric vehicles. Even without the new battery product, Li said demand for Nio vehicles was already going up in August.
The company, which posted a net loss of more than 1.17 billion yuan ($166.5 million) in the second quarter, forecast in its latest earnings release last week that it will deliver 11,000 to 11,500 vehicles in the third quarter.
Nio also hopes its new battery product can elevate its position in the industry.
"Our (competitive) benchmark is Benz, Audi, BMW and Tesla," Li said. "If they're willing to use (the battery service) then we have no issue because they can afford it. So it's just a question of whether they're willing to use it."