In a significant boost to its financial stability, Chinese electric vehicle manufacturer Nio Inc. has secured a substantial cash infusion of 13.3 billion yuan ($1.9 billion) from its existing shareholders. This move has sent the company’s shares soaring by nearly 16% on the Singapore exchange. The investment, comprising a mix of internal funds and strategic investors’ capital, will be used to reinforce Nio’s China unit, Nio Holding Co. A consortium of investors, including Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., and CS Capital Co., has agreed to inject 3.3 billion yuan in cash for newly issued shares of Nio China. Additionally, Nio Inc. will invest 10 billion yuan directly into the unit, reducing its stake from 92.1% to 88.3%. The remaining 11.7% will be held by the strategic investors and other stakeholders. According to Morgan Stanley, this investment is expected to resolve Nio’s fundraising concerns and enhance its near-term cash flow. The company has been struggling to gain traction in China’s highly competitive EV market, despite its efforts to differentiate itself through its charging network and research and development in battery-swapping technology and semiconductors. The cash injection will be completed in two installments by the end of the year, with Nio Inc. having the option to invest an additional 20 billion yuan in Nio China by the end of next year. This development comes as a relief to the company, which has been grappling with cash burn concerns and reported a 4.5 billion yuan loss in the second quarter. However, its quarterly sales have shown resilience, surging to 17.5 billion yuan despite weakening demand.
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