Shanghai – The founder and chief executive of Nio has apologized in an open letter after the Chinese electric car start-up had to recall around 5,000 vehicles after battery fires sparked safety concerns.
The New York-listed company will speed up production of new battery packs and replace those that are defective, said William Li in an open letter posted on the company’s app on Thursday.
“The battery safety incidents over the past two months have not only caused losses to affected car owners, but also upset many customers and concerned friends that have been supportive of Nio,” said Li in the letter. “I am deeply sorry … and feel responsibility and grief over the situation.”
The Shanghai-based company launched the ES8, which is an SUV, in 2017 as its first production model. Nio is among dozens of Chinese start-ups attempting to upend established electric carmakers such as Tesla. EVs have lowered the barriers to entry for car making because they do away with internal combustion engines that require hundreds of precisely engineered parts and China has been pushing the creation of an EV sector to rival efforts in the West.
The recall affects about 4,800 ES8 vehicles, whose battery packs are equipped with modules that due to improper positioning can cause short circuits in extreme cases, the company said in a regulatory filing to the New York Stock Exchange on June 27 after concluding an investigation.
The defective NEV-P50 modules were produced between April and October last year, and installed into vehicles accounting for about a quarter of all ES8 units sold. Nio said in its filing that the battery replacement is expected to be completed within two months.
However, China is preparing to slash EV subsidies in half from June, which could affect revenue across the sector, and Nio’s stock price has now dropped about 80 per cent from an all-time high in September on the New York Stock Exchange.
China sees connected EVs as an opportunity to reduce foreign oil imports and finally gain parity in car production with established powerhouses such as Germany, the US and Japan. To drive innovation the country has issued new car manufacturing permits to companies outside the traditional carmakers – many of whom were content to continue producing cars for overseas joint venture partners.
Nio’s recall is a setback to these efforts, and occurs after social media reports of three ES8s catching fire in just two months. The company hit another speed bump in January when a female driver complained her car had ground to a halt in one of Beijing’s most prestigious districts, and she was stuck inside until the vehicle completed a software upgrade.
Founded in 2014, the Shanghai-based company raised US$1.15 billion in an initial public offering on the New York Stock Exchange in September 2018. Nio decided to cancel a plan to build a Shanghai factory after reporting a full year 92 per cent year-on-year increase in net losses to US$1.4 billion in March.
A team from electric car maker Tesla said in April it was looking into a fire that destroyed a Model S sedan in China after the incident was captured by a security camera and then widely shared on Chinese social media. The incident prompted founder Elon Musk to tweet that EVs have a much better safety record on fires compared with internal combustion engine cars. (SCMP)