At the current stage, Baolong and Nio will cooperate on products including air springs, wheel speed sensors, and optical rain sensors.

(Image credit: Shanghai Baolong Automotive Corporation)

Nio (NYSE: NIO) and Shanghai Baolong Automotive Corporation, a local auto parts supplier, have signed a cooperation agreement to work together in areas including air suspension.

Shanghai-listed Baolong said in a stock exchange announcement today that it recently signed a strategic cooperation agreement with Nio at the electric vehicle (EV) maker's China headquarters in Hefei, Anhui province.

The signing ceremony was attended by executives from both companies, including Shen Feng, Nio's executive vice president and chairman of its global quality committee; Pan Yu, vice president of supply chain development of Nio; and Baolong chairman Zhang Zuqiu.

Baolong will support Nio in the areas of nearby supply, low carbon, digital transparency, and globalization, according to the parts supplier's announcement.

At this stage, the two will work together strategically on products such as air springs, air tanks, TPMS, wheel speed sensors, and optical rain sensors.

The two companies will also discuss cooperation in sensors, camera products and radar products, and jointly explore opportunities to deepen cooperation in vehicle body and environmental sensors, the announcement said.

Throughout the lifecycle of air suspension products, Baolong will support Nio's cost optimization efforts, including the reduction of VA/VE (value analysis and value engineering) costs and commercial costs.

Baolong will ensure that Nio has strong market competitiveness in the air suspension products, while Nio offers support and cooperates accordingly based on the actual situation, according to the announcement.

Baolong will also provide sufficient resources to strengthen cooperation in areas including product development and quality management to enhance Nio's development and delivery efficiency, the announcement said.

The strategic cooperation framework agreement, which does not involve a specific transaction amount, will not have a material impact on Baolong's operating results in 2023, and the impact on future results will depend on the signing of specific cooperation agreements, the parts supplier said.

Baolong was founded in 1997 and listed in Shanghai in 2017.

The company reported revenue of RMB 1.54 billion in the third quarter, up 33.5 percent year-on-year, according to its financial report released earlier today. It reported a net profit of RMB 155 million in the third quarter, up 195.25 percent year-on-year.

Baolong is a supplier to Nio's local counterpart Li Auto (NASDAQ: LI), supplying air suspension for the Li L8.

The Li L8 began trial production in October 2022 and achieved monthly production of over 10,000 units in December, supported by Baolong's newly established dedicated fully automated production line, Li Auto said on June 7 on Weibo.

"It's hard for foreign suppliers to invest more capacity for this," Li Auto's Weibo post at the time quoted Baolong's deputy general manager of automotive business, Li Ling, as saying.

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