Nio, a Chinese electric vehicle (EV) manufacturer, has obtained a $2.2 billion investment from CYVN Holdings in Abu Dhabi. This investment extends the financial standing of the firm, often seen as a competitor to Tesla, as it aims to establish itself in a highly competitive market.
This deal follows a previous investment by CYVN of $1 billion in July. As a result, the firm based in the Emirates will gain a 20% stake in Nio, as mentioned in Nio’s statement on Monday. Additionally, CYVN will also have the power to nominate two directors to the board of Nio.
William Bin Li, founder and chief executive officer of Nio in the statement said;
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.
Founded in 2014, Nio, which is yet to turn a profit, lags behind BYD and Tesla in China’s fiercely competitive EV market.
Bill Russo, the founder of Automobility, a consulting firm based in Shanghai, stated that Nio ranks 10th in the EV market in China. He noted that Nio, like its competitors, was forced to lower its prices after Tesla initiated a price war in the past year.
Elon Musk’s company began slashing prices in China, the world’s largest EV market, in October 2022 after witnessing a decline in its market share due to competitors such as BYD. Tesla has continued to reduce the prices of its China-made cars this year.
Tesla announced a decline in its third-quarter earnings in October, a downturn that analysts credited to price reductions impacting profit margins. Despite this, the company assured that it had been successful in reducing the cost per vehicle.
Russo said Nio will benefit from the new investment as it has been “spreading itself quite thin” by doing many things at once: launching new products, expanding its battery swapping infrastructure and establishing showrooms at premiere locations across China.
He added; “On top of that, they’re trying to go global. That has required a lot more capital than their sales have been able to support.”
Since 2019, Nio has provided battery swapping for its vehicles. The company now touts itself as the world’s largest operator of battery swapping technology. Since its inception, it has conducted over 32 million battery swaps at more than 2,100 stations.
