NIO Inc. (NYSE: NIO), a leading Chinese electric car maker headquartered in Shanghai, recently announced it will receive $2.2 billion in funding. The funding will come from CYVN Holdings, an Abu Dhabi-based investment vehicle.
NIO’s latest capital injection comes at a crucial time for the company. The EV industry is currently engaged in a price war, led by Tesla, which has slashed prices. Tesla has also taken steps to improve its efficiency, including cutting its workforce by 10%. Additionally, it has put non-core projects on hold.
The deal between NIO and CYVN Holdings is expected to be finalist by the last week of December. NIO had previously received $1.1 billion and $738.5 million in strategic investments from CYVN.
CYVN to Get 20.1% Stake in NIO
Once the deal is finalized, CYVN will own a 20.1% stake in NIO, making it the company’s biggest shareholder. Additionally, it will get two seats on Nio’s board of directors. However, the CEO and founder, William Li, will retain most voting powers with his class ‘C’ shares. CYVN will subscribe to 294,000,000 newly issued Class A ordinary shares at $7.50 per share.
According to the CEO, the company, whose EVs compete with iconic brands such as BMW and Mercedes-Benz in China, is developing two new brands for the mass market. It plans to launch them in Europe by 2025.
Both Companies Look to Evaluate the Technology
After completing the deal in December, the two companies and their affiliates will maintain their collaborative efforts, actively pursuing strategic and technological partnerships in international markets.
According to a Reuters report, Nio is mulling spinning off its battery manufacturing unit and working on new technologies and components to enhance its efficiency.
William Bin Li, founder and CEO, said, “We are deeply inspired by CYVN’s vision to accelerate the global transition to a more sustainable future, and we appreciate its endorsement of NIO’s unique values. With the enhanced balance sheet, NIO is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investments in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities.”
He added that NIO is looking forward to transforming the vehicle manufacturing industry.
NIO Stock Price Update
NIO stock pumped by 5.7% on Monday, reaching $8.44. The company shares also surged 8.1% last week, returning its position on Monday. Nio’s stock has experienced a decline from its peak of 16.18 in August to its all-time high of 66.99 in January 2021.
The Future of NIO Stock
NIO price has declined since August, although after the recent news about the funding of $2.2 billion from CYVN, it could push the price higher.
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