Who will be the Chinese answer to Tesla? In 2020, it looked like that was Nio. That year, the luxury electric vehicle maker’s shares rose more than 2,000 per cent, reflecting its potential as a homegrown brand that could match Elon Musk’s company’s engineering and design, attracting a rising class of local affluent consumers.

Today, Nio’s ascent is proving harder to sustain, and the premium EV segment has turned out to be far narrower than investors once hoped. The prize — chiefly scale, and with it the hope of expanding profitability — has already been captured by rivals playing a very different game.

Nio delivered around 222,000 vehicles last year, up roughly 40 per cent from the previous year. It still runs a net loss, running into the red by the equivalent of $720mn in the second quarter of this year. Local peer BYD, China’s market leader by number of vehicles, shipped more than 3mn last year and is profitable: its gross margin is nearly 20 per cent.