Nio has announced it will continue business growth and tech innovations after receiving $738 million in funding from the Abu Dhabi government.
Chinese electric automaker Nio has announced it secured $738.5 million in new funding from the Abu Dhabi government. The government invested in Nio through its CYVN Holdings fund and now owns 7% of the electric car company.
The funding deal priced Nio’s shares at $8.72 each, according to an official news release. The release says the price was calculated as the volume-weighted average price of Class A ordinary shares on the seven consecutive trading days before June 19. However, the figure is about 6.7% lower than Nio’s $9.35 US close on Tuesday.
Nio expects the deal to close in early July pending customary closing conditions. Upon conclusion, CYVN Holdings can nominate a director to Nio’s board of directors if it maintains an ownership stake of at least 5%. This nomination is still subject to legal, regulatory, and internal requirements.
According to Nio chief executive officer, founder, and chairman William Bin Li, the funding deal will allow Nio to make further growth and expansion investments. Li said:
“The [funding] will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth, driving technological innovations and building long-term competitiveness.”
Li also said the transaction with CYVN Holdings precedes a potential partnership that helps Nio expand its international business.
Nio Funding May Help Withstand Dwindling Car Deliveries
According to comments transcribed by FactSet from Nio’s Q1 earnings call, Li said the company had decided on a few cutbacks. The CEO noted Nio was postponing research and development, along with some major capital expenditures. The company took this route to manage a plunge in cash flow as it was delivering fewer vehicles.
Last Monday, Nio announced a few money-saving measures, including reducing car prices. The company took the equivalent of $4,200 off its cars to make them more affordable. In addition, Nio suspended free battery swaps.
Interestingly, Li said in April in a CNBC interview that Nio was uninterested in a price war. He said the company’s products are worth their price tag and would rather maintain these prices than reduce them. Li’s comment likely referred to rival Tesla’s (NASDAQ: TSLA) price cuts in China and the US, geared towards attracting more buyers.
With Nio’s new funding, the company is set to resume capital expenditure. The funding may also help Nio continue with research and development projects without waiting for car deliveries to resume.
Interestingly, Nio’s official delivery figure for March was 10,378 vehicles. The company also said its deliveries for Q1 2023 hit 31,041 vehicles, a year-over-year increase of 20.5%. The delivery included 7,175 sedans and 3,203 SUVs. However, Nio’s figure dropped 35.8% to 6,658 vehicles in April. Nonetheless, April’s figure was a 31.2% increase year-over-year.
In May, Nio announced 6,155 deliveries, a further drop of 7.5% from April. As of May 31, 2023, Nio’s total deliveries were 333,410 vehicles.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
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Source: https://www.coinspeaker.com/nio-738m-funding-abu-dhabi/