Nio (NIO) -) shares were surging in premarket trading Monday after the electric-vehicle maker said it had received a $2.2 billion investment from the Abu Dhabi investor CYVN.
Nio shares were climbing 8.5% to $8.66 at last check.
The deal follows CYVN’s more than $1 billion injection into Nio in July and will expand its stake in the auto company to about 20%.
CYVN will invest $2.2 billion cash for 294 million new shares of the Chinese electric-vehicle maker.
Once the deal closes, CYVN will be entitled to nominate two directors to the board so long as it maintains at least a 15% holding in Nio.
“With the enhanced balance sheet, NIO is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities,” William Bin Li, founder, chairman and chief executive of Nio, said in a statement.
Tesla price war hit Nio
It's been a rough ride for Nio’s holders. The stock reached as high as $66.99 in January 2021 before collapsing to an intraday low of $7 on June 1, 2023. They reached $16.18 on Aug. 4, then fell back to $7.01 on Dec. 1. The shares closed at $7.98 on Dec. 15, up 13.8% from Dec. 1.
Nio’s EV sales and profitability have taken a hit due to a price war started by Tesla (TSLA) -). The company has cut a tenth of its workforce and deferred non-core projects.
The company struggled with financial losses, production problems and the high costs of rolling out its battery-swapping system.
Lihong Qin told reporters that Nio would launch its cheaper Firefly brand in Europe in 2025. A move into the U.S. market is "still in the planning stages," Li said.
“We are looking for new investors, and financing is one of our daily jobs,” Qin said last week, according to the Financial Times. “It never stops, it’s just that currently the global financial policy environment has made this work more challenging.”
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