Abu Dhabi to Take 7% Stake in Chinese Electric Vehicle Maker Nio

(Bloomberg) — The government of Abu Dhabi is taking a 7% stake in Nio Inc. and will gain a board seat, giving the electric carmaker a capital infusion as it contends with losses and uncertain demand in China’s competitive EV market.

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

Shanghai-based Nio this month posted a worse-than-expected net loss in the first quarter as shipments slumped, fueling concern the company is losing ground in the highly competitive Chinese auto market. Nio Chief Executive Officer William Li responded by slashing prices on all of its models in China and delaying a goal to break even by year-end.

Read More: EV Maker Nio Reports Disappointing Loss as Sales Crater

The investment from CYVN “will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth,” Li said in the statement. The parties agreed to “jointly pursue opportunities in Nio’s international business” after the deal closes.

The investor will be allowed to nominate one director to Nio’s board as long as CYVN continues to maintain at least a 5% stake.

One of three Chinese EV makers listed in the US, Nio has been expanding into Europe and building an extensive network of battery swapping stations. A mass-market brand may be launched as soon as 2024.

After the earnings miss, Li said Nio needed to delay some investment in fixed assets, postpone some research and development plans, and be more cautious on its overseas expansion.

The CEO is still “confident” Nio can reach its goal of delivering more than 20,000 cars every month in the second half of the year, he said last week. The company is aiming to double sales to 250,000 electric vehicles this year.

Nio’s US shares fell 1.7% at 11 a.m. in New York.

–With assistance from Chunying Zhang.