In recent years, new forces such as Xiaopeng Automobile and Ideal Automobile have bid farewell to OEM through acquisitions and other means, while NIO Automobile (hereinafter referred to as "NIO") is still relying on JAC Automobile (hereinafter referred to as "JAC") for OEM production.
But a recent transfer announcement from Jianghuai has given NIO the opportunity to no longer rely on others.
Jianghuai transfers the "NIO" factory
Recently, Jianghuai announced that in order to further optimize its asset structure, the company plans to transfer some assets through public listing. The estimated value of the assets to be transferred this time is 4.49 billion yuan. This includes inventory, fixed assets, construction in progress, housing and land use rights of the three factories of the passenger car company, as well as the structure and equipment assets of the new bridge factory of the passenger car company.
At the same time, the company plans to divide the transfer transaction into three asset packages, one package for the inventory, fixed assets, and construction in progress of the three factories of the group's passenger car company; The second package includes the buildings, construction in progress, and land use rights of the third factory of the group's passenger car company; San Bao is the structure and equipment of the Xinqiao factory of the group's passenger car company.
Jianghuai stated in the transfer announcement that if the transaction is successfully implemented, it will have a positive impact on the company's financial condition and operating performance. Jiang Han, a senior researcher at Pangu Think Tank, told International Financial News that the transfer of Jianghuai may be aimed at improving the company's asset quality and operational efficiency, in order to better adapt to market changes and competitive environments.
In fact, the recent financial situation of Jianghuai has not been good. In the first half of this year, the actual revenue was 22.369 billion yuan, and the net profit attributable to the parent company was 155 million yuan, compared to a net loss of 712 million yuan in the same period last year. But most of the credit for turning losses into profits in the first half of the year may come from government subsidies.
Public data shows that in the first half of the year, Jianghuai Automobile received a total of 4 government subsidies, and relying on government subsidies, Jianghuai Automobile has received a certain amount of "recovery". In response, the company admitted that the government subsidies that affected profits and losses in the first half of the year were approximately 485 million yuan, an increase of approximately 171 million yuan compared to the same period last year.
Last year, the annual net loss of Jianghuai reached 1.582 billion yuan, a year-on-year decrease of 891.24%. As of the end of last year, the net cash flow from operating activities of the company was 1.531 billion yuan, a year-on-year decrease of 11.24%. To the middle of the year, this indicator is 582 million yuan, a year-on-year decrease of 5.4%.
However, Jianghuai Automobile's investment in the new energy passenger vehicle business is still expanding. This year, Jianghuai Automobile launched the Yttrium brand and also released its first model, the QX PHEV. Another brand, Ruifeng, released its first MPV exclusive architecture and its first concept car RF-M under the architecture in April of this year. At the same time, the cooperation between Jianghuai and Huawei is already firmly established, and the two sides will collaborate to develop and manufacture millions of MPVs, and plan to build a new energy vehicle factory in Hefei.
These all require a significant investment of funds. The net book value of the assets to be transferred this time is approximately 4.212 billion yuan, and the estimated value of the assets to be transferred is approximately 4.498 billion yuan (as of April 30, 2023). The value-added amount is approximately 286 million yuan, with a value-added rate of 6.79%. Jianghuai Automobile can alleviate financial pressure by transferring "blood circulation" of 4.5 billion yuan.
NIO is expected to take over
There is already a consensus in the market regarding the "successor" of the Jianghuai factory.
The reporter learned that the two factories in the first and third packages of assets transferred by Jianghuai are the Jianghuai NIO Advanced Manufacturing Base and NIO Second Advanced Manufacturing Base, namely NIO F1 Factory and NIO F2 Factory.
According to Li Bin, the founder of NIO, the Jianghuai NIO Advanced Manufacturing Base is the first factory established by JAC and NIO since 2016. NIO has invested tens of billions of yuan to establish a factory for NIO, and NIO participates in manufacturing cooperation management throughout the entire process, accepting vehicles according to the company's quality standards.
The second factory started construction on April 29, 2021, and was officially put into operation on September 26 last year. It is located in NeoPark, Hefei Xinqiao Intelligent Electric Vehicle Industrial Park. The factory industrial park is also jointly constructed by NIO and JAC Automobile, with a planned vehicle production capacity of 1 million vehicles per year and a battery production capacity of 100GWh per year.
Industry insiders believe that NIO is expected to take over these two factories, with the intention of incorporating production qualifications into its portfolio. The reason is that currently, among the new forces, only a few car companies such as NIO do not have production qualifications and still adopt the "OEM" model. "The possibility of other companies taking over is not high, as taking over also requires significant investment and time to adapt.
Jiang Han believes that NIO's acquisition of factories can provide stable production capacity and experience, as well as help the company better control production costs and product quality.
The International Finance News reporter also sought confirmation from both Jianghuai and NIO regarding this matter, but did not receive a positive response.
However, in the face of market calls, NIO only publicly stated that it has understood the relevant information of its partners and confirmed that this action will not affect the company's future production and business activities. The company will communicate relevant matters at an appropriate time and will not comment on this matter until then.
In fact, it is the trend for NIO to take over the production qualification of Jianghuai factory. In recent years, the National Development and Reform Commission and the Ministry of Industry and Information Technology have been strengthening their management of new energy vehicle production qualifications, making it difficult for most new enterprises that want to embark on the road of car manufacturing to start.
Previously, due to the lack of production qualifications and problems with the cooperative OEM factory, Ziyoujia was unable to produce its vehicle model. In the end, it bid farewell to the new energy vehicle market with an apology letter. Now that Xiaomi has entered the automotive industry, production qualifications are still one of the biggest obstacles on its road to car manufacturing. There are reports that Xiaomi has not yet obtained car manufacturing qualifications.
As early as last year, the Ministry of Industry and Information Technology issued a notice on the pilot work of commissioned production of new energy vehicles, which clearly stated that both the commissioning party and the commissioning party of new energy vehicle production must have production qualifications in order to carry out commissioned production. This means that the outsourcing model, which was once highly sought after by new forces in car manufacturing, is very difficult to implement.
Therefore, in recent years, Xiaopeng has acquired 100% equity of Guangdong Fudi Automobile Co., Ltd. to obtain production qualifications; Ideal to obtain qualifications by acquiring 100% equity of Chongqing Lifan Automobile Co., Ltd., a subsidiary of Lifan Automobile; Zero Run acquired Fujian Xinfuda Automobile and obtained the qualification for car manufacturing... New forces gradually took control of production qualifications in their own hands. As the top new forces gradually separated from "OEM", NIO's "self-produced and self sold" is also on the agenda.
The "joy and worry" of acquiring factories
For NIO, buying two factories and production qualifications for nearly 4.5 billion yuan is not an easy task.
Under the previous OEM model, from 2018 to 2022, according to the cooperation arrangement under the agreement, a total of 223 million yuan, 441 million yuan, 532 million yuan, 715 million yuan, and 1127 million yuan were paid to JAC Automobile, respectively. The accumulated OEM fees for the four years were less than the acquisition expenses.
According to the financial report, as of the end of June, NIO had 13.724 billion yuan in cash and cash equivalents in hand, 4.834 billion yuan in short-term loans, 7.225 billion yuan in the immediate portion of long-term loans, and a total of over 12 billion yuan in short-term bonds. After deducting this amount, NIO's surplus cash is not abundant.
It is worth noting that although Jianghuai stated in the transfer announcement that there is no personnel arrangement involved, if the factory is acquired by NIO, the disposal of on-site employees will be a challenge, and Jianghuai has not responded to this issue.
Jiang Han told reporters that the specific employee handling methods for NIO's acquisition of two factories will depend on multiple factors, such as the size of the two factories, the number of employees, business areas, financial situation, and so on. As a new energy vehicle manufacturer, NIO may prioritize how to integrate the technology and production capacity of the two factories to improve its competitiveness and production efficiency. At the same time, they may also consider retaining employees from both factories to avoid unnecessary layoffs and economic losses.
However, the market believes that the benefits brought by NIO's acquisition of the factory outweigh the disadvantages, and the main one lies in the ownership of production qualifications.
For new forces, getting rid of OEM must mean that they have already achieved large-scale development, and can handle the entire R&D and production process on their own. Holding the production and manufacturing process in their own hands is more conducive to improving the effectiveness of R&D and production execution, while also saving the company annual OEM costs.
Meanwhile, with the increase in sales and product variety of NIO, there have been reports that NIO has plans to build its own factory. At the beginning of this year, there was news that NIO would build its third factory in Hefei, mainly producing Alpine project products.
Another advantage of acquiring the factory is that NIO Automobile can no longer hang the tail label of "Jianghuai Automobile" in the future. For high-end NIO, some car owners mind wearing the "JAC Automobile" logo on their new cars, and even deduct the JAC Automobile logo directly after purchasing. After NIO acquires a factory and produces and sells itself, this problem will not occur again, further enhancing the brand's influence.
Of course, there are also drawbacks. Jiang Han pointed out that NIO not only needs to spend a lot of capital investment, but also needs to integrate and operate management after the acquisition, which requires a certain amount of time and resource investment. If the integration is unsuccessful or poorly managed, it may have a negative impact on the company's operations and development.
Reporter: Wu Di
