Is NIO's production capacity catching up with Tesla's?
Recent reports indicate that NIO has been approved to build its third factory, with an expected total production capacity of 1 million units, which is close to Tesla China's capacity of 1.1 million units.
NIO's president has also confirmed the news, stating that the approval to build the third factory is indeed true.
NIO is once again betting on the future.
NIO Reportedly Approved to Build Third Factory
The news was first reported by Reuters, citing insiders who revealed that NIO has received approval to build a third factory in China, codenamed F3. with an annual capacity of 600.000 units.
According to the insider, the factory will be located in Huainan, Anhui Province, and will primarily be responsible for producing the new brand "Alps" models that NIO recently launched.
Once the F3 factory is completed, NIO's total production capacity across all its factories will reach 1 million units.
This news quickly gained attention, as few new energy vehicle companies can achieve an annual production capacity of 1 million units.
Reuters and other media outlets sought confirmation from NIO, and NIO's president, Qin Lihong, responded to the reports.
Qin Lihong confirmed that NIO is indeed building a third factory.
However, he clarified that the factory is not located in Huainan, Anhui, but in the Xinqiao Smart Electric Vehicle Industrial Park in Hefei. The factory's single-shift production capacity is 100.000 units. It will be used not only for the production of the "Alps" brand but also for NIO vehicles.
NIO explained that the reason for building a new factory is to meet the growing demand for both NIO and the "Alps" brand, as well as to prepare for the launch of new products in the future. NIO's existing two factories in Hefei have already reached their designed single-shift capacity.
As for the news that the third factory will have a maximum capacity of 600.000 units and that NIO's total production capacity will reach 1 million units, NIO simply responded that this information is not accurate.
NIO also emphasized that the company does not have an issue with overcapacity.
In other words, NIO's products are selling well, and with the upcoming addition of the "Alps" brand and new models on the way, the current factories are already at full capacity, necessitating the construction of a new factory.
After all, before launching new products, it's essential to have sufficient production capacity.
NIO Bets on the Future Again
NIO's sales have been gradually recovering in recent months.
In May, NIO sold 20.544 vehicles, a year-over-year increase of 233.8%, more than doubling its sales, and a 31.5% month-over-month increase, marking the best performance this year. The cumulative deliveries for the year reached 66.217 units, up 51% from the same period last year.
At the same time, the launch of the "Alps" brand was also met with great enthusiasm.
Although the specific order volume for the "Alps L60" has not been publicly disclosed, NIO President Qin Lihong mentioned at a media briefing that the orders for the "Alps L60" have "far exceeded expectations, by 2-3 times."
These facts demonstrate that there is indeed a growing market demand for both NIO and the "Alps" brand.
With demand in place, who will handle production?
When the "Alps L60" was launched, there were reports that it would share a production line with the NIO ET5. but NIO's existing two factories already have established products in production.
NIO's F1 factory is responsible for producing the ES8. ES6. EC6. ET7. and other models, while the F2 factory produces the ET5. ET5T, EC7. ES8. and other models, each with an annual designed capacity of 300.000 units.
As Qin Lihong mentioned, producing the existing models alone has already reached the designed capacity, and with the addition of the "Alps L60" in the future, the existing production lines will face even greater pressure.
Moreover, besides the "Alps," NIO is also set to launch a third brand codenamed "Firefly."
According to previously disclosed information, this brand will primarily target the European market and is scheduled to launch in the third quarter, with production taking place in China.
Looking at it this way, with NIO's existing 8 models, upcoming new cars, and the models from the "Alps" and "Firefly" brands, three different brands with different positioning, if they are all produced by the existing factories, it will pose a significant challenge to production capacity and the supply chain.
Therefore, it’s not difficult to understand why NIO has chosen to start construction on a new factory in the near future.
Studying the factory and production capacity distribution of large car manufacturers reveals that it is common practice to have a single factory dedicated to producing specific models or models within a brand line.
For example, BYD's Shenzhen factory primarily produces the Tang and Han family of models, while the Xi'an factory handles the Song and Qin family of models.
This strategy is not only aimed at improving production efficiency but also at optimizing product differentiation and supply chain management.
With the commencement of the new factory's construction, NIO's production planning is entering a new phase.
