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Abu Dhabi to take 7% stake in Chinese EV maker NIO

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(Bloomberg) – Abu Dhabi’s government will take a 7% stake in Nio Inc. and get a board seat to inject capital into the electric car maker as it navigates losses and uncertainty in China’s competitive EV market demand.

Most reads come from Bloomberg

Abu Dhabi-controlled investment entity CYVN Holdings LLC agreed to buy about 85 million newly issued Class A shares for $738.5 million in cash, or $8.72 a share, according to a statement on Tuesday. CYVN is acquiring another 40 million shares from Chinese Internet giant Tencent Holdings Ltd. to achieve a 7% stake.

Shanghai-based Nio this month reported a smaller-than-expected first-quarter net loss as shipments slumped, heightening concerns about the company losing out in the highly competitive Chinese auto market. Nio CEO Li Bin responded by slashing prices on all of its models in China and delaying its goal of breaking even by the end of the year.

Read more: EV maker Nio reports disappointing loss as sales fall

CYVN’s investment “will further strengthen our balance sheet and fuel our ongoing efforts to accelerate business growth,” Li said in the statement. The two parties agreed to “jointly pursue opportunities for NIO’s international business” after the deal closes.

As long as CYVN continues to maintain at least a 5% stake, investors can nominate a director to Nio’s board.

Nio, one of the top three Chinese EV makers listed in the U.S., has been expanding into Europe and building an extensive network of battery swap stations. A mass-market brand could launch as soon as 2024.

After the financial report failed, Li said that Weilai needs to postpone some fixed asset investments, postpone some research and development plans, and be more cautious about overseas expansion.

He said last week that the CEO remains “confident” that NIO will be able to meet its goal of delivering more than 20,000 vehicles per month in the second half of this year. The company aims to double sales to 250,000 electric vehicles this year.

At 11:00 a.m. New York time, Weilai’s stock price in the United States fell 1.7%.

——With the assistance of Zhang Chunying.

Most reads come from Bloomberg Businessweek

©2023 Bloomberg Intelligence

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