A subsidiary of Chinese electric vehicle (EV) assembler Nio has received 3.3 billion yuan (US$471 million) in fresh capital from a consortium of investors backed by the government of Hefei in eastern China’s Anhui province, giving the carmaker a much-needed boost to develop its products and technologies.
The Shanghai-based company said in a statement on Sunday that it would also shell out 10 billion yuan to subscribe newly issued shares of the subsidiary, Nio China, but its holding in the unit would be reduced from 92.1 per cent to 88.3 per cent.
Following the share placement, Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment and CS Capital, along with other existing shareholders of Nio China, will increase their ownership from 7.9 per cent to 11.7 per cent, Nio said.
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With “an enhanced balance sheet”, Nio will be “strategically positioned” to maintain its advantages in technology, products, services and user community, promote a multi-brand strategy, succeed in broader markets, and “propel the company into the next stage of sustainable growth”, Nio, listed in both Hong Kong and New York, said in the statement.
It added that the Shanghai-based carmaker has the right to subscribe to another 20 billion yuan worth of shares in the subsidiary by the end of 2025.
The transactions are subject to regulatory and internal approvals, Nio said.
Authorities in Hefei, the provincial capital, have long been strong backers of Nio, which now operates two assemblies there.
The fundraising deal comes nine months after Nio, which is not profitable, secured fresh funds of US$2.2 billion from CYVN Holdings, an investment fund controlled by the Abu Dhabi government.
A photo taken on October 10, 2023 shows the a Nio manufacturing facility in Hefei, in east China’s Anhui province. Photo: Xinhua alt=A photo taken on October 10, 2023 shows the a Nio manufacturing facility in Hefei, in east China’s Anhui province. Photo: Xinhua>
The investment raised CYVN’s stake in Nio to 20.1 per cent, and made CYVN the first Middle East investor to hold a sizeable stake in one of China’s fastest-growing EV makers.
“Raising more funds by itself or via its subsidiary is of benefit to Nio now that competition in the Chinese electric car market is getting fiercer,” said Chen Jinzhu, the CEO of Shanghai Mingliang Auto Service, a consultancy. “Some cash-strapped EV players are facing difficulties in sustaining their operations since their cash reserves are likely to dry up amid a discount war.”
Nio, founded in 2014, saw its second-quarter net loss narrow 2.7 per cent from the preceding three months to 5.05 billion yuan, in line with market consensus among analysts tracked by Bloomberg. Revenue surged 76 per cent to 17.4 billion yuan, also matching expectations.
Early this month, the carmaker said it expected delivery volume in the third quarter to rise by as much as 10 per cent to an all-time high, spurred by state subsidies and growing demand from younger buyers.
Nio estimated that 61,000 to 63,000 EVs would be sold in the three months to September 30, versus the previous record of 57,373 units in the previous quarter.
On September 19, the company unveiled the L60 sport-utility vehicle under its new brand Onvo to take on Tesla’s bestselling Model Y. The SUV starts at 206,900 yuan, 43,000 yuan below the Model Y’s basic edition.
The L60, fitted with Nio’s swappable battery, has a driving range of 555km, matching the Model Y’s 554km.
The company’s battery swap technology allows drivers to get back on the road in just a few minutes with a battery change.
Currently, all cars under Nio’s namesake brand are priced above 300,000 yuan and compete against the likes of BMW’s X5 and Audi’s Q7. Onvo targets car buyers with budgets between 200,000 yuan and 300,000 yuan.
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