By ZHOU Shuqi

In October, JAC Motors sold three factories and equipment to Nio in a deal worth 4.5 billion yuan. Nio built both factories, but the production qualification was JAC’s.

With the qualification, Nio will no longer need to obtain funding through third parties, though may face pressure on cash flow in the short term. By June 30, Nio's cash reserves were 31.5 billion yuan (US$4.41 billion), a decrease of 6.3 billion yuan from Q1. Nio has postponed the release of its Q3 report this year, widely interpreted as an attempt to conceal or at least delay the release of poor data.

Over the past four years, JAC Motors has earned 3 billion yuan by contracting production for Nio, but there has been no significant improvement in its own financial situation. In the first half of this year, JAC Motors reported a non-net loss of 243 million yuan.

JAC is to work with Huawei’s auto-making spin-off to manufacture a premium MPV priced at around a million yuan. JAC Motors' joint venture with Volkswagen will also become a core player in Volkswagen's future EV business in China.

Last year, the Ministry of Industry and Information Technology ruled that both factories and startups must qualifications. The contracting model had been widely used by EV makers who could not get qualifications to make cars, but the strategy has been universally dumped due to the high cost and low output quality.