Nio Inc. founder William Li said the long-term growth potential of China’s EV market remains in place, boding well for the company even as competition from the likes of Tesla Inc. intensifies.

The country’s auto market has started to recover from the depths of the coronavirus pandemic, and the minuscule market share of EVs means they have a chance to grab sales from traditional gasoline powered vehicles, Li said in an interview with Bloomberg.

But he has his work cut out. EV sales have declined for 10 straight months in China and are forecast to drop 14 percent this year to fewer than 1 million units, according to BloombergNEF. 

Tesla Inc. started deliveries from a massive new Shanghai plant around the start of the year.

“We do compete against each other, but in general we are allies,” Li said, stressing both are trying to win users from gasoline rivals. “In fact, our sales kept growing since Tesla started production in Shanghai.”

Nio predicted late last month that its deliveries and revenue this quarter will more than double from a year earlier, as well as from the first three months of 2020. The company also reported a narrower first-quarter loss after curbing spending.

In April, the company struck a definitive pact for a 7 billion yuan ($1 billion) investment from groups led by the Hefei municipal government in China, alleviating concerns that it is running out of cash. That funding and potential future financings have put Nio on a solid footing, Li said.

“We are confident to have secured sufficient funding for the company’s development,” Li said.

The April fundraising effort paves the way for more Chinese financing for New York-traded Nio, Li said. That could prove helpful as U.S.-China tensions are heating up, with Chinese companies listed in the U.S. facing a threat of being forced out. The company now meets the criteria for a local Chinese listing, though it has no concrete plans for one, he said.

“This isn’t a challenge for Nio only,” Li said. “We wouldn’t exclude any potential options.”

Li also described Volkswagen Group’s plans, announced last week, to deepen ties with a Chinese EV partner in the Hefei region as “very positive news” for Nio. The move signals that the area is emerging as a powerhouse in the EV industry, and Li said Nio is also seeking to increase cooperation with local partners and encourage suppliers to invest more in the region.