Nio pays JAC for every car produced on a per-vehicle foundation month-to-month. It paid JAC a median of about $1,260 per car in 2022.
(Picture credit score: CnEVPost)
Nio’s (NYSE: NIO) car manufacturing accomplice JAC introduced final week that it plans to promote the belongings of two factories that produce automobiles for the electrical car (EV) carmaker.
Subsequent stories instructed that Nio may purchase these belongings and transfer from contract manufacturing to unbiased manufacturing for better self-reliance.
These developments have left many eager to know the main points of Nio’s partnership with JAC, and CnEVPost has discovered some worthwhile data after digging into Nio’s 2022 annual report.
The next is all from the English model of Nio’s 2022 annual report, a few of which can be repeated as they’re used somewhere else.
The primary a part of it, masking JAC in probably the most element, is a risk-related assertion, which normally lists all of the worst-case situations.
The ultimate part on this article lists the car manufacturing charges paid by Nio to JAC, although there seems to be some typos within the numbers talked about within the English texts, with three zeros lacking.
These numbers are appropriate in Nio’s Chinese language-language 2022 annual report, which stated it paid JAC RMB 531 million, RMB 715 million, and RMB 1.12 billion from 2020 to 2022, respectively.
Nio’s annual deliveries of 43,728, 91,429, and 122,486 in 2020-2022 imply that the corporate paid JAC a median of RMB 12,156, RMB 7,822, and RMB 9,197 ($1,260) per car in these three years.
Nio pays JAC on a month-to-month foundation for every car produced, in response to the report.
The next are extracts from Nio’s 2022 annual report in English by CnEVPost.
From web page 24:
Manufacturing in collaboration with companions is topic to dangers.
We accomplice with Jianghuai Vehicle Group Ltd., or JAC, a serious state-owned car producer in China, for the joint manufacturing of our automobiles.
JAC collectively manufactures with us all of our present car fashions, together with the ES8, the ES7 (or the EL7), the ES6, the EC7, the EC6, the ET7 and the ET5, within the first superior manufacturing base, or the F1 Plant, and the second superior manufacturing base, or the F2 Plant, and can collectively manufacture with us our different car fashions within the F2 Plant.
For the years ended December 31, 2020, 2021 and 2022, we paid JAC for every car produced on a per-vehicle foundation month-to-month.
Pursuant to the joint manufacturing preparations we entered into with JAC, as amended and renewed, JAC and us collectively manufacture a sequence of our car fashions within the F1 Plant.
We’re in control of car improvement and engineering, provide chain administration, manufacturing methods and high quality administration and assurance.
Jianglai Superior Manufacturing Know-how (Anhui) Co., Ltd., or Jianglai, a three way partnership for operation administration established by JAC and us, who joined as a celebration to the joint manufacturing preparations in Could 2021, is liable for elements meeting and operation administration.
Pursuant to the manufacturing cooperation agreements we entered into with JAC in September 2022, JAC will collectively manufacture with us the ET5 and doubtlessly our different car fashions within the F2 Plant.
We can be in control of related logos and associated applied sciences license, car specs, parameters and choice necessities, in addition to uncooked supplies provide.
In relation to the manufacturing cooperation agreements, we additionally entered into an belongings switch settlement and its supplementary settlement with JAC on December 23, 2022, underneath which we might switch to JAC sure tools and different belongings.
Collaboration with third events for the manufacturing of automobiles is topic to operational dangers which may be past our management.
We may expertise manufacturing and supply delays to the extent our companions don’t meet agreed-upon timelines or expertise capability constraints.
The quantity of automobiles manufactured may fall in need of expectation if there may be any adversarial change in our companions’ liquidity place or total operations that causes their lack of ability to satisfy their contractual manufacturing obligations.
There’s danger of potential disputes with companions, and we and our model picture could possibly be affected by adversarial publicity or public sentiment in the direction of our companions whether or not or not such publicity or public sentiment is expounded to their collaboration with us.
As well as, though we’re concerned in every step of the availability chain and manufacturing course of, on condition that we additionally depend on our companions to satisfy our high quality requirements, there will be no assurance that we are going to efficiently preserve high quality requirements.
Our joint manufacturing association with JAC for the car manufacturing within the F1 plant will expire in Could 2024, and our manufacturing cooperation settlement with JAC for the car manufacturing within the F2 plant will expire in September 2025, upon which, respectively, we might want to renew the related contract with JAC or find different manufacturing companions.
We could also be unable to enter into new agreements or lengthen present agreements with JAC and different third-party manufacturing companions on phrases and situations acceptable to us.
If that occurs, we could have to considerably improve our personal manufacturing capability, and there may be substantial uncertainty on our means to attain that and the timetable associated thereto.
The expense and time required to finish any transition, and to guarantee that automobiles manufactured at services of latest third-party companions, or at our personal services if we select to boost our personal manufacturing capability, adjust to our high quality requirements and regulatory necessities, could also be better than anticipated.
From web page 65:
If we replace our manufacturing tools extra rapidly than anticipated, we could should shorten the helpful lives of any tools to be retired because of any such replace, and the ensuing acceleration in our depreciation may negatively have an effect on our monetary outcomes.
We and JAC have invested and count on to proceed to take a position considerably in what we imagine is cutting-edge tooling, equipment and different manufacturing tools for the product traces the place the automobiles are manufactured, and we depreciate the price of such tools over their anticipated helpful lives.
Nonetheless, manufacturing expertise could evolve quickly, and we or JAC could determine to replace our manufacturing course of with superior tools extra rapidly than anticipated.
Furthermore, as our engineering and manufacturing experience and effectivity improve, we or JAC might be able to manufacture our merchandise utilizing much less of our put in tools.
The helpful lifetime of any tools that may be retired early because of this can be shortened, inflicting the depreciation on such tools to be accelerated, and to the extent we personal such tools, our outcomes of operations could possibly be negatively impacted.
Moreover, underneath the renewal joint manufacturing association we entered into with JAC and Jianglai in Could 2021 and underneath the manufacturing cooperation settlement we entered into with JAC in September 2022, we agreed to pay JAC the asset depreciation and amortization with regard to the belongings JAC invested and to take a position for the manufacture of our car fashions as truly incurred, payable month-to-month and yearly, respectively, and topic to adjustment yearly.
An elevated quantity of funding made by JAC into the manufacturing vegetation will result in an elevated price in asset depreciation and amortization, which may negatively have an effect on our outcomes of operations and monetary situations.
From web page 129:
Car Manufacturing
We accomplice with JAC for the joint manufacturing of our automobiles. JAC collectively manufactures with us all of our present car fashions, together with the ES8, the ES7 (or the EL7), the ES6, the EC7, the EC6, the ET7 and the ET5, within the F1 Plant and the F2 Plant, and can collectively manufacture with us our different car fashions within the F2 Plant.
The annual manufacturing capability of every of the F1 Plant and the F2 Plant will be expanded to as much as 300,000 items (calculated primarily based on 5,000 working hours per 12 months).
Pursuant to the joint manufacturing preparations we entered into with JAC, as amended and renewed, JAC collectively manufactures with us a sequence of our present car fashions, and can collectively manufacture with us our different car fashions, within the F1 Plant.
We’re in control of car improvement and engineering, provide chain administration, manufacturing methods and high quality administration and assurance. Jianglai, who joined as a celebration to the joint manufacturing preparations in Could 2021, is liable for elements meeting and operation administration.
Pursuant to the manufacturing cooperation agreements we entered into with JAC in September and December 2022, respectively, JAC collectively manufactures with us the ET5 and doubtlessly our different car fashions within the F2 Plant. We’re in control of related logos and associated applied sciences license, car specs, parameters and choice necessities, in addition to uncooked supplies provide.
From web page 351:
Manufacturing in collaboration with JAC
Since 2016, the Group have been partnering with Jianghuai Vehicle Group Ltd., or JAC, a serious stateowned car producer in China, for the joint manufacturing of the Group’s automobiles.
JAC constructed the JAC-NIO manufacturing plant in Hefei, Anhui province, the primary superior manufacturing base, or the F1 Plant, for the manufacturing of the ES8, the ES6, the EC6, the ET7 and doubtlessly the Group’s different car fashions.
Additional, in September 2022, the Group entered into a producing cooperation settlement with JAC, underneath which JAC will collectively manufacture the ET5 and doubtlessly the Group’s different car fashions within the second superior manufacturing base, or the F2 Plant, in NeoPark, a sensible electrical car business park at Xinqiao, Hefei.
The charges payable to JAC underneath the above agreements encompass the next:
(i) asset depreciation and amortization with regard to the belongings JAC invested and to take a position for the manufacture of NIO fashions as truly incurred, payable month-to-month and topic to adjustment yearly;
(ii) car manufacturing and processing charges recorded on per-vehicle foundation, payable month-to-month and topic to adjustment yearly;
(iii) buy quantity of sure manufacturing supplies;
and (iv) related tax. As well as, the Group additionally agreed to pay sure compensation as much as a capped quantity for JAC’s funding in F1 Plant, together with for the land, manufacturing facility and tools.
At the side of the aforementioned manufacturing cooperation settlement, in December 2022, the Group and JAC entered into an Asset Switch Settlement the place the Group agreed to promote and JAC agreed to accumulate sure manufacturing services (the “Transferred Belongings”) with a complete consideration of RMB1.7 billion inclusive of tax. As of December 31, 2022, JAC had accepted the Transferred Belongings and assumed the authorized title of the Transferred Belongings.
Contemplating that (1) the Transferred Belongings are designated for use for the manufacturing of the Group’s car fashions solely and would not have substantive different use; (2) all prices incurred in relation to the Transferred Belongings, together with depreciation and upkeep prices and related tax and surcharges, are undertaken by and charged to the Group; (3) the Group additionally has the suitable to acquire the financial advantages from all outputs of the Transferred Belongings, administration concluded that the Group nonetheless retained the management of the Transferred Belongings and this transaction was a failed sale and leaseback transaction with no gross sales of the Transferred Belongings acknowledged by the Group.
The Transferred Belongings proceed to be accounted for because the Group’s property, plant and tools topic to depreciation. The gross sales consideration from JAC can be recorded as a financing payable when the Group receives the money.
As of the date of issuance of this monetary statements, JAC had not paid the consideration.
For the years ended December 31, 2020, 2021 and 2022, the combination charges to JAC underneath the above collaboration association had been RMB 531,565, RMB 715,118 and RMB 1,126,523, respectively, and had been included in price of gross sales.
($1 = RMB 7.3174)
Nio could purchase belongings JAC plans to promote and search its personal EV manufacturing qualification, report says