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At NIO Inc., the Tesla Inc. wannabe from China, electric vehicle sales are plummeting, losses mounting and the stock price cratering. But founder and Chief Executive Officer William Li can’t see what all the fuss is about.

“No big deal,” says Li.

In an interview on Wednesday, Li waved aside the stock rout that’s wiped more than 70% from NIO’s market value in three months, upending the company less than a year after its New York listing. Investors, Li said, need to understand that developing new vehicles costs money and NIO will be profitable within a few years.

“It is not realistic to count on a company like us to make a lot of profit from the very beginning,” Li said. “The long-term investment value in NIO has not yet been fully understood.”

NIO, which listed in New York in September 2018, is on track to complete a fundraising deal announced in May to finance product development, Li said. Under that agreement, Beijing investment company E-Town Capital will inject as much as 10 billion yuan ($1.4 billion) and take a minority stake in a new entity, NIO China, that will be controlled by NIO Inc.

NIO is fighting for relevance in a country overflowing with aspiring electric-car makers, and where foreign competition from the likes of Tesla is intensifying. As the government pulls back on the very subsidies that pumped up the market, there’s concern that China’s almost 500 electric vehicle makers might wither to a small band of survivors.

Getting worse

Li said NIO will use the new entity for RMB funding after previously relying mostly on raising dollars. “We would like to connect the U.S. and Chinese capital markets,” he said, adding that his company is also mulling a move into the U.S. car market.

“I am currently leading a team working on” figuring out what is the right way to enter the U.S., Li said. “We hope to do it as soon as possible.”

NIO shareholders, battered by lower-than-expected sales, aren’t waiting to see the results. The stock price started to implode in March, when the company cut its delivery outlook and canceled a plan to build a plant in Shanghai. The decline continued last month after NIO said vehicle sales fell 55% in the first three months of the year and demand will wane further in the second quarter.

NIO shares are down 16% this month and fell to a record low on Wednesday in New York. The sales slowdown, partly due to the subsidy reduction for electric vehicles, has been exacerbated by the U.S.-China trade war.

Li said NIO’s decision not to build a manufacturing plant in Shanghai has saved the company significant capital expenditure. While he didn’t rule out building a factory in Beijing at some point, he said NIO will rely on a third party to build cars in the city for the time being.

Set up four years ago, NIO will still be profitable faster than Tesla, Li said.

“You have to work on product development,” he said. “What I can say for sure it that we don’t need more than 10 years to turn a profit.”

With assistance from Selina Wang and Sabrina Mao.

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