Li Bin, Chairman of NIO (Photo/VCG)

Feb. 26 (NBD) – Chinese electric vehicle startup NIO (NYSE: NIO) on Tuesday entered into a framework agreement with Hefei, Anhui Province to build a China headquarters in the city.

On the same day, Hefei government stated that apart from the headquarters, the company will build its base for R&D, sales and production in the city and develop a national operational system with Hefei as the focus. It's noticed that over 10 billion yuan is set to be raised for the project.

In an interview with National Business Daily (NBD), NIO's Chairman Li Bin said that the signing of the framework agreement means a lot for both sides, adding that the local government of Hefei will provide supports in investment, project implementation, among others for the company.

Stock of NIO surged by 13.4 percent to close at 4.4 U.S. dollars on the day.

Agreement expected to be finalized in 2 months

Also on Tuesday, NIO launched mass production of its EC6 models in the JAC-NIO Advanced Manufacturing Center in Hefei. As the EV startup's third production model, the EC6 sedan was unveiled in December 2019.

Shares of Anhui Jianghuai Automobile ("JAC", 600418.SH) rose by daily limit of 10 percent on both Tuesday and Wednesday.

NBD noticed that upon shifting to Hefei, NIO aims to become a leading enterprise with an output value of 100 billion yuan in five years.

Li Bin revealed that to put the project in place as soon as possible, Hefei and NIO are working hard in a bid to ink a final cooperation agreement within two months.

Will the establishment of NIO's China headquarters in Hefei bring any change to the function of the company's Shanghai office?

Li Bin told NBD that NIO plans to set up a "NIO China" company in Hefei after the project is finalized, NIO's businesses in China will be operated via the new entity, and the company's other units in the country will exist as subsidiaries, Li added.

File photo/Zhang Xiaoqing (NBD)

Cooperation with E-Town Capital subject to final agreement

Since last year, reports have been popping up, saying that NIO were in talks with several local governments for building new plants.

In response, Li said to NBD that there is no need to build new factory unless the JAC-NIO manufacturing base reaches its full capacity.

In April 2016, NIO and JAC signed a strategic cooperation agreement to build a manufacturing base which aimed to produce 50,000 cars annually in the first phase. For now, the JAC-NIO plant has achieved yearly capacity of 100,000 cars.

"The cooperation with JAC gives NIO an excellent industrial base in Heifei," Li noted.

NBD found that last May, NIO inked a framework agreement with Beijing E-Town International Investment & Development Co. (E-Town Capital) which involves 10 billion yuan of investment from the latter. However, no substantial progress has been made up to date.

Li held that a complex process always falls between a framework agreement and a finalized one. "The cooperation with E-Town Capital is subject to the final agreement," Li remarked.

Also, speaking of the reports that Geely (0175.HK) seeks to buy into NIO with 300 million U.S. dollars, Li said, "We don't comment on rumors. No matter how NIO raises fund, the company will make public announcement once any substantial progress is made."

Email: lansuying@nbd.com.cn