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GAC NIO, a joint venture between NIO and GAC Group, on Thursday apologised for announcing the use of digital currency without regulatory approval. Photo: Shutterstock

NIO’s venture apologises for premature embrace of China’s digital currency to buy electric cars without regulatory approval

  • The electric car joint venture between start-up NIO and GAC Group made the announcement on the use of digital currency on Weibo only to withdraw it
  • Carmaker, however, says that it was closely studying the central bank’s policies on digital currency and has been making preparations to use it

NIO’s electric car venture with Toyota Motor’s Chinese partner announced a premature embrace of China’s digital currency, only to retract it hours later for lacking the necessary permission to accept payments in the virtual yuan.

GAC-NIO, a venture between start-up NIO and Guangzhou-based GAC Group, said in its official Weibo blog that it would accept payment in bitcoin for car purchases, but later retracted it. Bitcoin transactions are illegal in China.

The announcement was amended to digital currency, for which the Chinese central bank is conducting trials in four cities, excluding the home location of GAC-NIO. The carmaker later posted an apology on its blog for the back-to-back errors and confusion.

“Without considering the fact that it needed to pass through a licensing procedure by the financial regulators, the announcement that the company will become the first carmaker to accept digital currency has drawn wide attention from the public,” the company said in a statement. “We sincerely apologise for the confusion.”

GAC-NIO announced on its official Weibo account on Thursday morning that it would accept payments in bitcoin, but later deleted the post. Photo: Weibo

The carmaker, however, did say that it was closely studying the central bank’s policies on digital currency and had been making preparations for its use. It could still become the first Chinese carmaker to adopt digital currency in transactions if it were to secure regulatory approval as no other car company has announced such plans.

Is China’s battle of the electric cars a proxy war of nation’s Big Tech?

“As an emerging new-energy vehicle builder, a widespread use of e-payment is in line with the digitalisation trend,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “Being the first carmaker to use digital currency could help hone its image as an innovative player.”

China, a world leader in digital payment systems, is pursuing a national digital currency. Unlike a speculative cryptocurrency, the digital renminbi is a sovereign currency fully backed by the state.

The People’s Bank of China is conducting a trial of its sovereign digital currency in four cities including Suzhou, Xiongan, Shenzhen and Chengdu. Driven by latest blockchain technology, China’s digital currency does not require a bank account.


Nio enhances production efficiency amid rising orders for its electric-powered SUVs

Nio enhances production efficiency amid rising orders for its electric-powered SUVs

It remains unclear whether Chinese consumers and merchants will accept the digital yuan given the popularity of already ubiquitous electronic payment services such as Alipay and WeChat Pay.

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China’s NEV manufacturers are expecting a busy 2021, with the China Association of Automobile Manufacturers forecasting a 40 per cent jump in sales. Sales of NEVs, including purely electric, petrol-electric hybrids and fuel-cell powered vehicles, are likely to top 1.8 million units, compared to an estimated 1.29 million units in 2020.

NIO, along with Xpeng and Li Auto are making premium electric cars with smart navigation and in-car entertainment systems to compete against global leader Tesla.

GAC-NIO, founded in 2018, launched the brand Hycan in May 2019. The mass-produced version Hycan 007 hit the market in April, with prices ranging from 259,800 yuan (US$39,722) to 400,000 yuan.

This article appeared in the South China Morning Post print edition as: Nio venture sorry for jumping gun on digital currency