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From Jianghuai "OEM" to now the two sides jointly set up a joint venture, which is dominated by Jianghuai Automobile, which means that the two sides will become "partners" in a new direction.

On March 4, Jianghuai Automobile announced that Anhui Jianghuai Automobile Group Co., Ltd. is signing a letter of intent for a joint venture with Ulai Holdings Co., Ltd. The name of the joint venture company is proposed to be "Jiang Lai Advanced Manufacturing Technology (Anhui) Co., Ltd.". The two sides plan to further deepen cooperation in advanced manufacturing and service management and supply chain in the field of intelligent network-connected new energy vehicles.

According to the announcement, the registered capital of Jiang Lai Manufacturing is proposed to be 500 million yuan. Among them, Jianghuai Motor plans to subscribe 255 million yuan, accounting for 51% of the total registered capital, while Xilai Motor plans to subscribe 245 million yuan, accounting for 49% of the total registered capital.

Jiang Lai Manufacturing Board is proposed to be composed of five directors. Among them, Jianghuai Motor has the right to appoint 3 directors, and Lulai Motor has the right to appoint 2 directors. The board of directors shall have one chairman and one vice-chairman. The chairman is proposed to be the director appointed by Jianghuai Automobile, and the vice chairman is proposed to be the director appointed by Xilai Automobile. The chairman is also the legal representative of Jiang Lai.

From the proportion of the rights issue and the directors, as well as the registered address of the joint venture company is "9766 Susong Road, Economic and technological Development Zone, Hefei City, Anhui Province", that is, the current address of the Jianghuai NIO factory. It can be seen that Jianghuai Motor will have the main say in the joint venture, which means that Jianghuai Automobile has officially changed from "OEM" to "partner". It is understood that since April 2016, Jianghuai Automobile has begun to carry out contract manufacturing for Xilai Automobile, which is also the reason why Jianghuai Automobile has been rumored to be a "contract factory" by the outside world.

The establishment of "Jiang Lai Manufacturing" through a joint venture is in fact a win-win cooperation. For Xilai Automobile, it will get rid of the contract manufacturing mode and solve the deficiency of insufficient production capacity. As for Jianghuai, we can make up for our shortcomings in new energy vehicles through cooperation with NIO.

According to the new company, the business purpose of Jiang Lai Manufacturing is to lead manufacturing by innovation-driven through in-depth cooperation in the field of advanced manufacturing technology and services, promote the transformation and upgrading of the automotive industry, and explore to create an innovative business model.

In addition, the business scope of the joint venture is proposed as follows: manufacturing, process research and development, manufacturing management and operation services of intelligent electric vehicles and spare parts; supply chain management; R & D and sales of auto parts; technical consultation, technology transfer, technical services and personnel training related to smart electric vehicles; exhibition services and business services related to the above-mentioned activities.

As a matter of fact, the establishment of the new joint venture company is regarded by the industry as a "back-feeding" to Hefei, and the purpose is to promote further cooperation between Jianghuai Automobile and Xilai Motors.

It is worth mentioning that the cooperation object established by the new company is not JAC "OEM" Xilai, but the parent company of Lulai to come to China. On April 29 last year, the state-owned strategic investment in Lulai automobile project in Hefei was finalized. According to the investment agreement, strategic investor Hefei (Hefei Construction Investment, China Investment Investment, Anhui Hi-tech) will invest 7 billion yuan in NIO China, and NIO will invest 4.26 billion yuan in China. After the completion of the deal, NIO Motor holds 75.9% of the controlling shares in NIO China, with a total of 24.1% held by strategic investors.

The two sides also signed a bet agreement: if NIO China fails to submit an IPO application within four years after receiving the full investment of the first phase of the strategic investor, it will complete the listing within five years; and NIO Motor fails to inject assets into NIO China within one year after the full investment is injected into the first phase. After receiving the full investment in the first phase, NIO China has delivered less than 20,000 cars for two consecutive years, then NIO needs to buy back shares from strategic investors.

It can be said that the success of this strategic investment in Hefei helped NIO pull back from the "line of life and death" and promoted the follow-up development of NIO. Data show that in 2020, the number of cars delivered by NIO was 43728, up 113% from 20565 in 2019. According to the financial report, the operating income of NIO reached 16.258 billion yuan in 2020, an increase of 107.8 percent over the same period last year, with an adjusted net loss of 5.117 billion yuan, narrowing by 53.32 percent over the same period last year.

Although Xilai is still in a loss-making state, it has survived compared to the most difficult year, 2019. At the same time, with the establishment of the new joint venture, Li Bin said. "by the end of this year, the Jianghuai NIO factory will have an annual production capacity of 150000 vehicles in a single shift and 300000 vehicles in a double shift." Because Jianghuai Automobile has begun to expand the factory.

In addition, affected by this news, as of press time, Jianghuai Automobile share price rose directly by the limit, offering 9.49 yuan per share, with a total market value of 17.93 billion yuan.

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