NIO Inc. shares climbed 5% to $6.86 on Tuesday after the company announced a new investment agreement for its Chinese subsidiary, NIO Holding Co., Ltd. Trading volume of NIO has surged to 177 million shares on Monday alone.
The strategic investment, valued at RMB 3.3 billion ($451 million), involves Hefei Jianheng New Energy Automobile Investment Fund, Anhui Provincial Emerging Industry Investment, and CS Capital. NIO will invest an additional RMB 10 billion ($1.37 billion) in NIO China, bringing its stake to 88.3% from 92.1%.
The agreement allows NIO the right to invest an additional RMB 20 billion ($2.74 billion) in NIO China by December 31, 2025. The investment is expected to be completed in two phases by December 2024, pending regulatory and internal approvals.
The new capital will bolster NIO’s balance sheet and support its multi-brand strategy as it seeks to expand its market presence and drive sustainable growth in the electric vehicle sector, says the company.
NIO currently has seven models available, including the ET7, ET9, ET5, ES6, ES8, ES7 and EC7. The company differentiates itself from other EV automakers by leveraging a massive battery swap station network.
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