BEIJING – Troubled Nio Inc. said it secured a 7 billion yuan ($989 million) investment in Nio China, a new entity controlled by the Chinese electric vehicle maker.
The new investment will aid cash flow and guarantee future product developments, Chief Executive William Li said at a news conference, adding it will not impact existing partnerships with Changan and GAC or the ownership structure of its New York-listed company.
The investors include state-controlled Hefei Construction Investment Holding Co., CMG-SDIC Capital Management Co. and Anhui High and New Technology Industrial Investment Co.
Nio makes the ES8 and ES6 crossovers in the eastern city of Hefei with state-owned JAC. The plant has capacity to build 120,000 cars annually. Nio sold 20,500 EVs last year.
Li said the coronavirus epidemic had an impact on Nio's supply chain and sales in the first quarter but said the negative impact had passed.
Nio delivered 3,838 vehicles in the first three months, and sales and production recovered in March compared with February.
In a statement, the company said Nio will inject its core businesses and assets in China, which are valued at 17.77 billion yuan, into Nio China and invest 4.16 billion yuan in it.
Nio will hold 75.9 percent of the new company and investors will control the remaining stake, once the transactions are completed.
"Today's deal removes near-term solvency risk surrounding Nio and likely means investors can refocus on things like volumes and margins," analysts at Bernstein said in a note.
Nio China headquarters are planned for the Hefei Economic and Technological Development Area. Nio would consider expanding capacity in Hefei if sales grow.
In February, Nio said it signed framework agreements with the Hefei city government to raise funds in excess of 10 billion yuan.
Nio plans further developments along with the Hefei government, Li added, but did not give additional details.