July 31 (NBD) -- Chinese electric vehicle (EV) startup NIO opened a new user center Nio House at Shanghai's landmark the Shanghai Tower, following its other user centers in Beijing, Guangzhou, Nanjing and Hangzhou.

NIO said on its website that it plans to open NIO Houses in 10 different cities nationwide by the end of 2018.

NIO has invested heavily in deploying Nio Houses, most of which are located at city landmarks. The EV company was reported to invest approximately 80 million yuan (11.7 million U.S. dollars) in the Nio House residing at Taikoo Hui, Shanghai. The annual rent of its user store at Beijing Oriental Plaza is estimated to be 80 million yuan (11.7 million U.S. dollars). Based on these figures, the yearly rent of its Shanghai Tower user center is estimated to cost over 100 million yuan (14.7 million U.S. dollars).

Photo/NBD

However, some questioned the exorbitant rental expenses, asking how many EVs NIO has to sell every year in order to offset the pile of money spent on those fancy user centers.

With regard to this, business news portal yicai.com quoted a source at NIO, saying that the strategy is aimed to improve NIO's brand image. The source noted that as China's tariff cut on imported cars would give foreign auto brands, especially high-end ones like Audi, Mercedes-Benz and BMW, an upper hand in China, Chinese domestic automakers have to improve their brand images and upgrade their core technologies to compete with foreign high-end carmakers. NIO's investment in user centers will surpass R&D input with broader distribution of Nio houses, the source added.

But the biggest problem facing NIO and other emerging Internet automobile manufacturers is the production qualification. Without the qualification, those Internet carmakers have to outsource production to OEMs (original equipment manufacturers), which explains why a few Internet cars have been delivered in China.

Late last month, NIO announced the official delivery of its first-batch EVs, the SUVES8 model. But the company's founder and chairman Li Bin declined to reveal the number of cars delivered. yicai.com cited industry insiders saying the first deliveries stood at several hundred and by the end of August this year, the first 1000 customers can get their cars delivered.

In the meantime, NIO is seeking to obtain the qualification of independent production. Construction of its plant in Jiading District, Shanghai has started. Li also acknowledged the difficulty for start-up Internet carmakers to get such a qualification, underlining the importance of manufacturing techniques as well as the support from the government.

Email: gaohan@nbd.com.cn