Chinese electric vehicle (EV) manufacturer Nio Inc. is set to inject 13.3 billion yuan (US$1.9 billion) into its China unit through a combination of its own funds and contributions from strategic investors. This move aligns with the company’s efforts to expand its charging infrastructure and advance its battery-swapping technology.
Strategic investors, including Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co. Ltd., and CS Capital Co. Ltd., have signed definitive agreements to contribute 3.3 billion yuan in cash in exchange for newly issued shares of Nio Holding Co. Ltd., also known as Nio China. In parallel, Nio Inc. will invest an additional 10 billion yuan directly into the unit, according to a company statement issued on Sunday.
As a result of these transactions, Nio Inc.’s ownership stake in Nio China will decrease to 88.3%, down from the previous 92.1%. The strategic investors and other stakeholders will hold the remaining 11.7%.
China has heavily invested in the EV sector, but domestic competition and international tariffs have cast uncertainty over its future. Nio has attempted to solidify its position by expanding its charging network and increasing research and development (R&D) investments in battery-swapping technology, while also exploring non-automotive ventures, such as semiconductors.
The capital injection will be carried out in two installments, with completion expected by the end of the year. Additionally, Nio Inc. has secured the right to invest an additional 20 billion yuan to acquire more shares in Nio China by the end of next year under the same pricing and terms.
Despite ongoing concerns about the company’s financial stability, Nio Inc., which has yet to achieve profitability, reported a 4.5 billion yuan loss for the second quarter. However, the company’s quarterly sales reached 17.5 billion yuan, slightly exceeding analysts’ expectations despite weakening demand.
Hefei Jianheng and Anhui Provincial Emerging Industry Investment, both tied to the Anhui provincial government, have a history with Nio, having led a US$1 billion investment in 2020 to ease concerns over the company’s financial health. In December, Nio also secured a US$2.2 billion investment from Abu Dhabi-backed CYVN Holdings LLC.
Featured Image courtesy of Global Fleet
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