Geely to acquire 30% of Nio’s power unit as part of battery-swapping, charging business deals

[SINGAPORE] A 30 per cent stake in Chinese electric-vehicle giant Nio’s power unit will be acquired by a subsidiary of fellow EV company Geely.

This is part of a number of agreements relating to battery-swapping and charging businesses.

As part of this transaction, Geely will offer a 100 per cent equity interest in its subsidiary, Yiyi Internet Technology, on top of 640 million yuan (US$95 million) in cash.

Yiyi Internet Technology is a unit of Geely that provides battery-swapping services for the commercial mobility market.

Post-transaction, Nio Power will be valued at about 16 billion yuan, a statement noted on Monday (Sep 28).

Nio Holding, a subsidiary of Nio, will continue to hold a controlling equity interest of 63.6 per cent after the deal is completed. An existing investor, Wuhan Guangchuang Emerging Technology Phase I Venture Capital Fund Partnership, will hold the remaining 6.4 per cent.

“The finalisation and implementation of these plans are subject to further discussions between the relevant parties,” said Nio.

Vincent Sun, senior equity analyst at Morningstar, said that bear investors historically view heavy capital expenditure by Nio on battery-swapping stations as a “financial drain”.

“By bringing in Geely as a (partial) stakeholder, Nio... unlocks the intrinsic value of its previous infrastructure investment,” he told The Business Times.

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The groundwork for Geely is also laid to develop future vehicle models compatible with Nio’s swap architecture, noted Sun.

“Peers that rely on high-speed charging will need to weigh whether to push harder on their own proprietary charging networks or form cross-industry coalitions to match.”

Shares of Nio ended 0.3 per cent or US$0.01 down at US$3.63 on Friday.