Nio Scraps Plans For U.S. Factory, Will Import Chinese-Made EVs Instead | Carscoops

Nio says it looked at setting up vehicle manufacturing in three states, but ultimately decided it would be too expensive, will import vehicles from China instead

Nio’s quest for a potential U.S. manufacturing site has yielded no results, leading the automaker to opt for importing electric vehicles from China instead. Consequently, the EV manufacturer has temporarily abandoned any prospects of its EVs qualifying for tax incentives.

The Inflation Reduction Act (IRA) provides up to $7,500 in tax incentives for American buyers who choose electric vehicles that are made in North America. However, buyers can bypass the foreign-assembly restriction of the law by choosing consumer-leased vehicles. Nevertheless, automakers aiming to extend the tax reduction to all buyers, whether they lease or buy, such as Hyundai and Kia, have chosen to make significant investments in U.S. manufacturing.

At the NextChina Conference hosted by the China Project news outlet in New York on Thursday, Ganesh Iyer, the head of Nio’s U.S. operations, stated that the automaker would not be part of among the wave of foreign automakers setting up factories in the U.S., as reported by Nikkei. Instead, the company aims to commence importing Chinese-made vehicles to the States by 2025.

Read: Nio Sales Surge 60% But It’s Slashing Its Workforce By 10%

Iyer explained that while Nio had identified three states as potential manufacturing locations, the high cost of establishing operations in the USA has deterred the company. Cost-cutting has been a significant focus for the automaker in recent weeks.

In China, Nio announced on Friday that it would be reducing its workforce by 10 percent and postponing or canceling investments in long-term projects that wouldn’t yield returns within the next three years. The company’s financial situation is uncertain, with a recent report indicating that it may incur losses of up to $35,000 per vehicle produced.

Cost wasn’t the sole concern for Iyer; he also pointed out that the company relies on several suppliers that do not operate in the U.S. Additionally, Nio’s highest-priced vehicles wouldn’t be eligible for incentives, regardless of their place of manufacture, due to their high MSRPs. Nevertheless, if the company opts to import its vehicles directly from China, it will likely still have to deal with big tariffs.

The expense of importing Chinese vehicles into the U.S., along with Nio’s ongoing cost-cutting initiatives, introduce an element of uncertainty despite Iyer’s statements. When asked about the automaker’s confidence in launching its first vehicle in the country by 2025, he acknowledged that while it was the company’s goal two years ago, “things are changing.” Nevertheless, he remained staunch in his commitment to getting its vehicles stateside.

“My goal, and my commitment to this company, is I want all of us to buy a Nio car from our personal paycheck one day,” Iyer said. “I hope that ‘one day’ will be sooner, which means we need help from everyone — government, policymakers, supply ecosystem [and] infrastructure readiness.”