Chinese EV maker Nio sees AI, robots replacing 30% of workforce by 2027 to improve efficiency, cut costs

Nio, one of China’s top three builders of premium electric vehicles (EV), aims to reduce its workforce by a third by 2027 as it rapidly replaces them with robots.

Earlier this month, the company said it had cut 10 per cent of its workforce to boost efficiency and stay competitive.

The Shanghai-based carmaker is actively pursuing a higher level of automation in production and also plans to slash managerial positions by 50 per cent as it introduces more artificial intelligence (AI) technologies at its plants, according to Ji Huaqiang, vice-president of manufacturing, logistics and operations.

“We want to resort to AI technologies to largely reduce reliance on skilled workers and technicians, and hence save more labour costs,” he said on Friday. “If 80 per cent of our decisions [in manufacturing] can be made by AI, it will enable us to reduce 50 per cent of our managerial positions in 2025.”

Cars are assembled at Chinese EV maker Nio’s factory. Photo: Nio

Industrial robots could help the company cut the use of workers on the production lines by 30 per cent between 2025 and 2027, he added.

Nio had a workforce of about 7,000 at the end of 2022, according to data from corporate registry website Qichacha.

Nio envisions full automation, or a labour-free system, at its manufacturing sites in future, banking on advanced AI and robotic technologies, Ji said. He, however, admitted it was difficult to give a time frame.

Major EV makers are under pressure to stem losses amid escalating competition in mainland China, the world’s largest EV market. Crowded with 200 players, concerns are mounting over severe overcapacity.

Nio has yet to make a profit since it was established in 2014, but the carmaker, along with Xpeng and Li Auto – the three Chinese premium EV assemblers – is now facing new rivals such as smartphone vendor Xiaomi and search-engine giant Baidu, whose intelligent vehicles are luring wealthy motorists away from the established players.

Nio delivered 126,067 vehicles in the first 10 months of 2023, up 36.3 per cent year on year. Its president Qin Lihong said in a speech during the Guangzhou Auto Show on November 17 that 40 per cent year-on-year sales growth was not fast enough to reflect the company’s design and manufacturing strength.

The carmaker operates two plants, both in Hefei, capital of eastern Anhui province. The first factory has an annual production capacity of 150,000 units on one shift, while the second is capable of building 300,000 vehicles annually, also on a single shift. A single shift normally requires 1,000 workers.

“Nio already has a big production capacity and its manufacturing technique is advanced enough to support high growth,” said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. “The company needs to design and produce more vehicles that can appeal to more Chinese drivers to bolster sales.”

At the second plant near Hefei Xinqiao airport, 756 robots are used to achieve 100 per cent automation in one of the manufacturing processes.

Nio aims to turn the factory into the world’s smartest with advanced equipment, flexible processes and efficient supply-chain management, Ji said.

Nio’s rival, Guangzhou-based Xpeng, said in April that it would fine-tune its designs and improve efficiency next year, hoping to slash costs by 25 per cent to stay ahead of the competition.

The efficiency drive and cost-cutting programme would put unprofitable Xpeng on the road to generate positive cash flow by 2025, the carmaker’s president Brian Gu said.