SAN JOSE (KPIX) — Signs of a shake-up in the electric car industry Thursday as a Chinese company with a sizable foothold in the South Bay slams the brakes on some of its big plans.
Chinese electric car manufacturer Nio made a big splash when it opened a new research and development campus in San Jose. The company lured top engineering talent from nearby Silicon Valley companies.READ MORE: UPDATE: Investigation Underway Into Apparent Shooting On I-580 In Oakland
The company’s flagship vehicle is an SUV called the ES8 that is mostly sold in China. In a recent 60 Minutes interview, company founder William Lee didn’t deny that he aims to knock out Tesla for the luxury electric car crown.
“I heard that you are the one who called this the Tesla Killer,” Lee was asked on the CBS News magazine program.
“Yeah, maybe, maybe,” Lee said in response.
Nio is backed by the Chinese government. But like it’s main rival Tesla, Nio is finding it difficult to grow a car company from the ground up.
The company recently scrapped plans to build its own factory in Shanghai, telling investors, “The company has agreed…to terminate the plan for this manufacturing plant…to focus on the joint manufacturing model for the long term.”
The announcement caused Nio company stock to tumble 20 points this week.READ MORE: San Francisco Bans City-Funded Travel To States Over Voting Restrictions
William Riggs, a management professor at USF and Mineta Transportation Institute Associate who follows the electric car industry, told KPIX the turn of events doesn’t necessarily spell the end for Nio.
“Do I consider it a fatal blow? No,” said Riggs. “The rise and fall of a company stock is not always an indication of company health'”
As Tesla and Nio fight for market share, they face similar problems.
Both companies are burning through cash, scaling back plans, and trying to solve supply chain issues while US- China trade tensions continue to soften the marketplace.
Riggs said it shows the lucrative electric car race is still up for grabs.
“The electric vehicle market is in the trillions of dollars,” said Riggs. “And I think it’s still to early to say if Nio will be the Tesla killer, or if Tesla will win out or if there is another emergent company.”MORE NEWS: COVID: Santa Clara County Health Officials Prepare To Vaccinate Kids 5-11 As Authorization Looms
Making electric vehicles is still a new industry, and Riggs says there are likely to be ups and downs for manufacturers for years to come.