NIO Burns the Boats: A Desperate Gamble to Escape the “Next Evergrande” Curse

(Subtitle: The breakup with JAC isn’t just a business deal. It’s a fight for survival.)

“The next Evergrande.” Is there a more humiliating label for NIO, once the icon of China’s tech innovation? Plagued by persistent losses and staggering debt, the market has relentlessly questioned NIO’s very survival.

Now, that same company has announced a complete split from its partner of a decade, JAC Motors, by dissolving their joint venture. While many see this as a simple business adjustment, I see it as the beginning of a desperate, high-stakes gamble by a cornered company fighting for its life.

Is this a masterstroke for a comeback, or a reckless move that will hasten its demise? Let’s dive into NIO’s struggle from their perspective.

1. Breaking the Chains: The Weight of the “Made by JAC” Label

In my view, the partnership with JAC was a crucial lifeline for NIO in its early days, but it eventually became a heavy chain holding back its growth.

• A Brand in Conflict: NIO has spent billions building a “premium” image. However, the “JAC Motors” (江淮汽车) badge on the rear of its vehicles created constant confusion for customers. “Am I paying a premium price for a car ultimately made by JAC?” This fundamental question was an anchor, constantly dragging down NIO’s brand value.
• An Uncontrollable Cost: Contract manufacturing saves initial costs but becomes a liability as a company scales. For every car built, NIO had to pay JAC a fee of around 10,000 RMB (~$1,400). For a company bleeding billions each quarter, this fixed cash outflow was excruciating.

The dissolution of the joint venture was the first desperate move to break these two massive chains. It was a painful realization that they could no longer survive by relying on someone else’s name and factory.

2. Building Its Own Fortress: The Double-Edged Sword of 1 Million-Unit Capacity

Having severed ties with JAC, NIO has now built its own fortress.

• The Upside: Absolute Control
  By acquiring JAC’s factories and building a third one, NIO now commands an astonishing annual production capacity of 1 million units—a scale comparable to Tesla’s Shanghai Gigafactory. This gives them absolute control over everything from quality management to the immediate implementation of new technologies like their semi-solid-state batteries. They have finally achieved the “complete in-house manufacturing” necessary to become a true premium brand.
• The Downside: A Colossal Risk
  But this is where NIO’s biggest gamble begins. In the first half of 2025, NIO sold about 72,000 vehicles. Annually, that’s less than 150,000 units. Imagine running a massive fortress capable of housing a million soldiers, but only having 150,000 to fill it. The immense fixed costs could cripple the company’s finances, making it a fatal double-edged sword. The financial pressure is now exponentially greater than the old contract manufacturing fees.

3. What Does This All Mean?

This split and declaration of independence is not a victory lap for NIO. It is a declaration that they are going “all-in,” shouldering all the risks themselves.

They have solved the problems of ‘brand dilution’ and ‘contract fees’ only to take on the much larger burdens of ‘massive fixed costs’ and ‘immense pressure to explode sales.’ There’s no more hiding behind JAC as an excuse. If they fail, the failure is theirs alone.

And yet, this was a path NIO had to take to survive. To compete with the true giants like Tesla, Mercedes, and BMW, you eventually have to fight on your own terms, from your own factory, with your own technology.

Conclusion: The Boats Are Burned. Now, They Must Fight.

The end of the NIO-JAC joint venture is the moment NIO burned its own boats to escape the “next Evergrande” curse. Now, the only way is forward.

They have acquired the ultimate weapon for survival: a 1 million-unit capacity factory. But if they cannot recruit enough soldiers (sales) to fill this massive fortress, it will become their tomb.

The market is holding its breath. Can NIO win this desperate gamble and make a spectacular comeback? Their real survival game starts now.