Chinese EV startup Nio has announced that it won’t be building its own manufacturing plant in Shanghai after all.

Nio released its Q4 and full 2018 financial results on Tuesday, and the company said the agreements it reached in 2017 to build its own manufacturing plant in Jia Ding, Shanghai have been terminated. Nio will continue to use its existing plant with state-owned JAC Motors to build its cars. The company says the agreement will “give it capacity and flexibility to support its market penetration and growth plans for the next two to three years.”

The company reported $720 million in revenue for 2018, but it also posted a $1.4 billion net loss, nearly doubling its losses from the previous year.

Nio produced 12,775 and delivered 11,348 of its seven-seater ES8 SUVs to consumers in 2018. This exceeded the company’s targets, Nio CFO Louis T. Hsieh said. But Hsieh also said in Tuesday’s report,

“…we expect a greater than anticipated sequential decrease in deliveries in the first quarter 2019, partially due to accelerated deliveries made at the end of last year in anticipation of EV subsidy reductions in China in 2019, as well as the seasonal slowdowns surrounding the January 1st and Chinese New Year holidays. We also expect deliveries in the second quarter 2019 to reflect continued weakness as we await the results of the 2019 EV subsidy policy in China and improvement in the macro-economic conditions.”

As of this writing, Nio’s stock fell nearly 20 percent since Tuesday’s announcement in extended-hours trading.

Nio Founder and CEO William Li remained optimistic in his comments.

“Looking to the year ahead, we believe that our user community will continue to grow, and we are excited that we are about to begin deliveries of the ES6 and the 6-seater ES8 variant as we remain focused on continued market penetration through enhanced products and services.”

Nio launched its ES6 electric SUV in December. The company entered the U.S. stock market last September with a $1 billion IPO.

While Nio has killed its Shanghai manufacturing plans, Tesla’s Gigafactory 3 in the city could be ready as soon as May.


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