Nio (NYSE: NIO), Xpeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) have joined the ranks of major automakers in committing to prompt payment of supplier invoices.
“We will continue to adhere to a payment term of 60 days or less, working with upstream and downstream partners to jointly promote the high-quality development of China’s automotive industry,” Nio said in a statement today.
The healthy development of the supply chain system is the foundation for ensuring product quality and enhancing user experience, Nio said.
Nio is committed to becoming a user-centric enterprise leading in technology and experience, existing for user satisfaction, it said.
Earlier today, Xpeng and Li Auto announced similar commitments, following moves by major automakers.
This initiative aims to respond to regulatory authorities’ requirements and maintain the stability of China’s automotive industry supply chain, the automakers said.
To date, about 15 companies have issued such commitments, including BYD (HKG: 1211, OTCMKTS: BYDDY), Geely Auto, Chery, Changan Automobile, Xiaomi EV, and Leapmotor (HKG: 9863).
Over the past few years, the issue of prolonged payment cycles for suppliers has frequently sparked discussions, posing potential threats to the security of the supply chain.
Recently, with the outbreak of a new round of price wars in China’s automotive market, concerns have intensified that suppliers’ profitability and survival space could be further squeezed.
Notably, among the new automotive startups, Nio currently has the weakest financial position.
Nio reported a net loss of RMB 6.75 billion (about $939 million) in the first quarter, representing a year-on-year increase of 30.19 percent, although this was a decrease of 5.08 percent compared to the fourth quarter of 2024, according to its unaudited financial report published on June 3.
As of March 31, the company’s cash and cash equivalents, restricted cash, short-term investments, and long-term time deposits totaled RMB 26 billion.
Nio said at the time that it experienced operating cash outflows in the first quarter, with current liabilities exceeding current assets, and as of March 31, 2025, shareholders’ equity was negative.
($1 = RMB 7.1867)
China’s major automakers and some new carmakers have pledged to shorten supplier payment terms amid concerns about supply chain security.
