China EV maker Nio wins US$2.2 billion Abu Dhabi cash boost
NIO, the loss-making Chinese electric vehicle (EV) maker, has scored another cash injection from the Middle East after Abu Dhabi-backed fund CYVN Holdings said it will invest US$2.2 billion.
Upon completion of the deal, CYVN will own a 20.1 per cent stake in Nio, having subscribed for 294 million newly issued shares, indicated a statement from the companies on Monday (Dec 18). CYVN will also be entitled to nominate two directors to Nio’s board.
Nio’s stock jumped as much as 9.5 per cent in US premarket trading.
Shanghai-based Nio is no stranger to CYVN. The group invested US$738.5 million in Nio in July and later acquired shares in Nio from an affiliate of Tencent Holdings for US$350 million, Monday’s statement said. Bloomberg reported in September that the embattled EV manufacturer was considering raising additional funding by approaching investors in the Middle East.
“Our increased investment in Nio represents a continuation of our ongoing strategy to build a leading global portfolio in the mobility space,” said Jassem Al Zaabi, chairman of CYVN. “This transaction demonstrates our confidence in Nio’s unique positioning and competitiveness in the global smart EV industry.”
The capital injection is a big reprieve for Nio. Once considered one of the brightest rising stars in China’s EV market, the carmaker has been falling badly short of its sales targets and continues to post losses.
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Nio said earlier this month that it now projects revenue of up to 16.7 billion yuan (S$3.1 billion) in the three months till December, short of the 21.4 billion yuan average estimate from analysts.
Nio’s sales for the first 11 months of this year meanwhile – 142,026 cars – are far off its original goal of shipping 250,000 EVs in 2023. The company has trimmed 10 per cent of staff and spent around US$450 million to purchase production assets from its partner so that it can save on manufacturing costs.
In a letter to staff explaining the jobs cuts, Nio’s founder and chief executive officer William Li said the move was “a tough but necessary decision against fierce competition”.
Earlier this month, Bloomberg reported that Nio may undertake further job cuts to reduce costs and improve efficiencies. Some departments have been asked to prepare reserve lay-off lists, which may widen the original dismissals to 20 to 30 per cent within the unit, people familiar with the matter said.
Nio’s US-listed shares are down almost 20 per cent this year. BLOOMBERG
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