Chinese electric vehicle manufacturer Nio Inc. has announced plans to invest 13.3 billion yuan ($1.9 billion) in its China subsidiary. This strategic move aims to support the expansion of Nio's charging infrastructure and battery-swapping technology.
A group of strategic investors, including Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., and CS Capital Co., have committed to investing 3.3 billion yuan in cash for newly issued shares of Nio Holding Co., also known as Nio China.
Nio Inc. will also directly contribute 10 billion yuan to the unit's new shares. As a result of these transactions, the parent company's ownership will decrease from 92.1% to 88.3%. The remaining 11.7% stake will be held by the strategic investors and other stakeholders.
Despite China's significant investments in electric vehicles, the domestic market remains highly competitive, with challenges posed by overseas tariffs. Nio has focused on differentiating itself through its extensive charging network, research and development in battery-swapping technology, and ventures into non-automotive sectors like semiconductors.
The cash injections from the strategic investors will be completed in two phases by the end of 2024. Nio Inc. also has the option to invest an additional 20 billion yuan in the unit by the end of 2025.
While Nio has faced concerns regarding its cash burn and has yet to achieve profitability, the company reported a surge in quarterly sales to 17.5 billion yuan in the second quarter, surpassing analyst expectations.
Hefei Jianheng and Anhui Provincial Emerging Industry Investment are affiliated with the Anhui Provincial government. These investors have a history with Nio, having previously invested $1 billion in the company in 2020.
In December 2023, Nio also secured a $2.2 billion investment from CYVN Holdings LLC, a company backed by Abu Dhabi.
(Source: Bloomberg)