Chinese EV maker Nio invests $142 million in nuclear fusion startup Neo Fusion

Despite billions of dollars being poured into generative AI startups following the recent success of ChatGPT, investors are slowly warming up to nuclear fusion startups as the technology shows increasing promise.

Last week, we wrote about Helion after Microsoft agreed to buy electricity from Sam Altman-backed nuclear fusion startup. The deal was a vote of confidence for fusion energy, which harnesses power the way the sun makes energy. Now, Chinese electric vehicle maker startup Nio is also investing in a Chinese tech startup that is developing fusion technologies.

Nio has invested 995 million yuan (about $142 million) for a 19.9% stake in Neo Fusion, a Chinese nuclear fusion startup that is researching and developing technologies to harness the power of the Sun to bring controlled fusion for commercial uses, Reuters reported Friday, citing sources familiar with the deal.

In addition, Reuters also reported that Nio Capital, the investment firm founded by Nio’s chief executive William Li, also invested 505 million yuan (about $142 million) for a 10.1% share. The investment by Nio also underscored the loss-making EV maker’s ambitions in the power and energy sector.

Nio’s investment further highlights the ambitions of the electric vehicle (EV) manufacturer in the power and energy industry, despite their current financial losses.

Nio invested 995 million yuan for a 19.9% stake while Nio Capital, the investment firm founded by Nio’s chief executive William Li, invested 505 million yuan for a 10.1% share, it showed.

“Staying true to the original aspiration of Blue Sky Coming, Nio aims to facilitate the R&D and commercialization of nuclear fusion technology by making financial investment into this project,” which plans to attract more strategic and financial investors in phases, Nio told Reuters in a statement on Friday.

According to the financial details in the company registration filing seen by Reuters, Neo Fusion has a registered capital of 5 billion yuan ($723.37 million). The startup is 50% owned by energy companies and investment arms of the government in China’s eastern province of Anhui.

For more than half a century, researchers and governments around the world in a race to zero emissions have been trying to solve the challenge of nuclear fusion, a nuclear process, where energy is produced by smashing together light atoms. Theoretically, nuclear fusion could provide a cheap, clean, and almost boundless source of energy. For example, one tablespoon of liquid hydrogen fuel—a mix of deuterium and tritium—would produce the same energy as 28 tons of coal.

Unlike the nuclear reactor, which uses nuclear fission, harnessing the power of an artificial star on planet Earth to generate electricity has great advantages over our current sources of energy that produce no carbon, sulfur, or nitrogen emissions.

NIO was founded in 2014 as NextEv by William Li. The company later renamed itself NIO in 2016. The Shanghai-based startup has several subsidiaries worldwide, one of them in San Jose, California. To date, the company has raised more than $1 billion from investors led by Tencent Holdings Ltd. NIO is preparing for its next phase of growth in the world’s biggest electric-car market. Following its latest billion-dollar capital raising last month, Nio was said to be valued at about US$5 billion. In addition to Tesla, the company will be competing against homegrown rivals such as BYD Co., as well as industry giants Volkswagen AG and General Motors Co.