This New York-listed Chinese electric carmaker’s flagship vehicle keeps catching fire

Even though electric vehicles are less likely to catch fire than gasoline-powered cars, cases of EVs bursting into flames are nonetheless unsettling—especially when they happen to prominent companies like California carmaker Tesla and New York-listed Chinese car brand NIO.

NIO’s flagship battery sports utility vehicle ES8 caught fire in China’s central Wuhan city on Friday afternoon (June 14), local newspaper Chutian Metropolis Daily (link in Chinese) reported. A witness at the scene told the newspaper he saw black smoke and fire coming from the seven-seater’s chassis, while firefighters said there was a small explosion when they tried to put out the fire. There were no injuries. The car owner told the newspaper that he paid half a million yuan ($72,000) for the luxury SUV in September—when NIO began delivering ES8, of which the firm has sold more than 15,000 units as of May.

It’s the third incident of an ES8 catching fire or emitting smoke. In late April, a parked ES8 in the northern city Xian caught fire while being repaired. NIO blamed (link in Chinese) a short circuit in the battery pack. In May, another parked ES8 emitted smoke in a garage in Shanghai, NIO’s home base.

NIO told Quartz it’s investigating the Shanghai and Wuhan (links in Chinese) incidents and declined to provide further details. The NIO fires come after two parked Tesla Model S cars caught fire in Shanghai and Hong Kong.

The incidents come at a bad time for NIO as the five-year-old carmaker is under huge pressure in a transition period, as China prepares to slash electric-vehicle subsidies in half from this month. Its stock price has dropped 80% from an all-time high in September on the New York Stock Exchange. The firm, which debuted in the premium space, recently accepted a bailout from a state-owned firm, which said it would invest 10 billion yuan ($1.45 billion) into a joint venture with NIO, and has delayed plans for an electric sedan.

NIO is also set to start delivering its compact electric SUV ES6, which will be cheaper than its current ES8 offering, this month.

The incidents come as NIO is already facing questions about its cash burn and manufacturing operations. The company outsources manufacturing to state-owned JAC Motors, and abandoned a plan to build its own factory in January. NIO’s cars are powered by batteries from the world’s largest EV battery company, CATL (paywall).

The fires also highlight a broader industry issue. Efforts to increase battery range for electric cars involve increase the energy density of their Lithium-ion batteries—the amount of energy stored in the battery per kilogram (paywall). That can make a battery more prone (paywall) to smoke or fire incidents. As yet, there is no consensus (pdf, p.22) in the industry on safe design standards as battery technology evolves, according to a 2017 report by the US National Highway Traffic Safety Administration.

Still, according to the same report, electric cars powered by these battery systems are no more prone to (pdf, p.19) accidents or fires than internal combustion ones.

These EV fires could nevertheless dent China’s auto sales even further. The electric car sector had been the only bright spot in the slowing auto market, but they now seem to have hit the brakes too. China’s EV car sales grew 126% last May from a year earlier—this May, they only grew 2%.

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