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Nio secures $2.2bn injection to boost international ambitions
Abu Dhabi investment fund CYVN becomes largest stakeholder in the OEM
Chinese automaker Nio has bolstered its balance sheet with a funding injection of $2.2bn from investment fund CYVN, which has ties to the Abu Dhabi government. CYVN will purchase 294mn newly issued class A ordinary shares of Nio at a price of $7.50/share.
This is the latest round of investment into the automaker from the Abu Dhabi fund. After this latest stock purchase, CYVN will hold a 20.1pc stake in the automaker.
In July, the company received a $738.5mn strategic equity investment from CYVN. Additionally, CYVN acquired certain class A ordinary shares of the company from an affiliate of China's Tencent Holdings for an aggregate consideration of $350mn. This suggests that total investment from CYVN into NIO stands at over $3bn.
"With [an] enhanced balance sheet, Nio is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities,” says William Bin Li, Nio CEO.
Nio says it is strengthening its finances to prepare for a planned international expansion. "Nio and CYVN, and their affiliates, will continue to work jointly to pursue strategic and technology collaborations in international markets following the closing of the December investment transaction," Nio says.
That might mean a plan to bring its affordable Firefly brand to the European market in 2024. "That timetable is a full year earlier than the one previously disclosed by the company," says financial analyst and journalist Clark Schultz.
"Meanwhile, Nio sub-brand Alps is anticipated to be launched in Europe sometime after 2025," Schultz continues.
The prospect of Chinese EV makers undercutting European automakers with cheap BEV imports has been the subject of controversy. A trade practices investigation by the European Commission is ongoing.
However, after partnering with government-affiliated CYVN, Nio could also be looking to follow the likes of Chinese EV peer BYD into the Middle East market. BYD launched its flagship Han sedan in the UAE in November.
Nor is Nio the first EV maker to get financial backing from funds linked to Middle Eastern petrostates. US EV pure play Lucid boast the Saudi Arabian sovereign wealth fund the PIF as a 60pc owner.
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Nio has been facing pressure on its margins and management has stressed the company's need for greater efficiency after cutting its workforce by 10pc in November.
The company delivered 142,026 vehicles year-to-date in 2023, increasing by 33.1pc year-over-year, but recorded net losses of RMB4.56bn ($624.6mn) in the third quarter of 2023, an increase of 10.8pc from the same period of 2022.
Furthermore, the planned expansion into Europe may see the automaker lean heavily on smaller margin EVs under its affordable export marques, compared to the premium segment vehicles under its own Nio brand. Any move into the Middle East, however, may provide a hedge by offering a large addressable market for its higher-margin vehicles.
The firm continues to press ahead with growing its unusual battery-swapping model both in China and Europe. Nio has just opened its ninth power swap station (PSS) in the Netherlands, located on the Sijsjesbergweg in Amsterdam. There are now 33 PSSs in Europe.
And it is also pushing technological boundaries. Over the weekend, CEO Bin Li drove a Nio ET7 to test the 150kWh ultra-long-range battery pack. After driving for over 14 hours, the car achieved a range of over 1,000km on a single charge.