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The Chinese Tesla electric car company, on the verge of closing

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Manish Saini
Manish works as a Journalist and writer at Revyuh.com. He has studied Political Science and graduated from Delhi University. He is a Political engineer, fascinated by politics, and traditional businesses. He is also attached to many NGO's in the country and helping poor children to get the basic education. Email: Manish (at) revyuh (dot) com

Just an electric motor, a battery and little else. After this idea as happy as fallacious, there have been few companies that have flourished in recent years sheltered by electric mobility, following a sort of 21st century gold rush that runs the risk of fading as soon as reality hits The new manufacturers. And it is that to put a car on the street it takes more than an electric motor, a battery and little else.

It takes a lot of liquidity to invest in R & D & I beyond the kinematic chain, capital is needed for vehicles to exceed minimum quality standards, money is needed to mount profitable commercial networks. And, above all, you need something that money cannot always buy: that potential buyers rely on a car brand to carry out the second most important purchase of their lives, after housing.

It is necessary, in short, that the newcomers to the sector learn the positive experience of more than a century of chain manufacturing.

NIO wanted to be a revolutionary brand of electric cars, one more, back in 2014, and only five years later it seems bound to close. In September the alarms jumped: NIO accumulates 5,470 million dollars of losses. And this, in the bubble of electric cars. A bubble that could prick at the least thoughtful moment, if China continues the slowdown of its internal market, the world’s leading automobile market.

Nio share Prices

Now, NIO shares have collapsed. Investors turn their backs on what was a promise in the world of Chinese electric cars. In a scenario in which the Chinese Government itself has turned off the tap to its countless electric car startups in anticipation of a possible collapse, the main one is being seriously threatened.

The economic challenge, the main problem

He misses the picture for a company that last September had to resort to the collection of 200 million dollars, which they put on the table between its CEO, William Li, and its main shareholder, Tencent Holdings, the technology giant responsible for applications like WeChat.

This horrible year has resulted in a requirement for NIO. Analysts say that the company has weeks to live if it is not able to raise capital that allows it to regain its head.

As explained by The Financial Times Bernstein analyst Robin Zhu, the problem of NIO has not so much to do with the calls for review suffered by the brand due to fire problems in their electric cars, but with the inability of the brand to “convince to customers that a NIO can live up to an Audi or a Tesla.”

According to the analyst, “the problem with NIO is that it has not aroused interest among Chinese consumers.”

No customers and no alternative

The comparison proposed by Robin Zhu is interesting, since Tesla has forged in 16 years, counted since its foundation, a reputation that allows you to obtain money from your loyal customers even when there is no car in sight, at a level of loyalty that In real estate it almost resembles buying a luxurious house on a plane.

This has given Tesla a great oxygen balloon, which sails at a good pace in a sea of ​​traditional manufacturers. Tesla has not only been loyal, but has managed to monetize that loyalty without spending money along the way. At this point, analysts agree that NIO has not done his homework.

NIO has not known or could not reproduce that knack from Tesla. And much less that of Audi. Speaking of Audi, and any traditional manufacturer, an additional problem for new companies dedicated to the manufacture of electric cars is precisely due to its specificity. If Audi’s e-tron sales fail, it will always have its gasoline and diesel cars left.

At least for the moment.

That safety net with which traditional manufacturers continue to jump is the third critical point of emerging brands such as NIO. Without liquidity, without a brand image and without a marketable alternative, good luck should be in a disruptive scenario, but where there is still nothing sentenced.
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