China’s Tesla challenger Nio to raise $738.5 million from Abu Dhabi-based CYVN Holdings

Just a month after investing $142 million in nuclear fusion startup Neo Fusion, Chinese EV maker Nio said Tuesday that CYVN Holdings, a firm backed by the Abu Dhabi government, will be investing approximately $738.5 million. Nio said the fresh capital infusion is aimed at strengthening its financial position and enhancing its balance sheet.

Under the recently announced agreement, Nio will issue approximately 85 million new Class A shares priced at $8.72 per share to CYVN Holdings. In addition to this investment, CYVN Holdings has also entered into an agreement with a Tencent Holdings affiliate, through which it will acquire a portion of Nio’s shares, Reuters reported.

Nio, along with its competitors Xpeng and Li Auto, is actively vying for a larger share of the electric vehicle (EV) market in China, which is currently dominated by BYD.

Upon the successful completion of both transactions, CYVN Holdings will hold a 7% stake in Nio. This significant holding will enable the investment firm to nominate one director to Nio’s board. In addition, Nio also announced that it will collaborate with CYVN Holdings on global business opportunities once the investment deal is finalized.

“The strategic investments from CYVN Holdings demonstrate NIO’s unique values in the smart electric vehicle industry. The Investment Transaction will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth, driving technological innovations and building long-term competitiveness,” said William Bin Li, founder, chairman and chief executive officer of NIO. “In addition, we are excited about the prospect of partnering with CYVN Holdings to expand our international business. With the vision of Blue Sky Coming, we will continue to strive for technological breakthroughs and user experiences beyond expectations, contributing to a more sustainable future for the globe.”

In the first quarter, Nio witnessed a 20% increase in deliveries, delivering 25,768 units to customers compared to the same period the previous year.

However, Nio’s cash and cash equivalents declined to 14.76 billion yuan ($2.15 billion) in the first quarter of this year, down from 19.89 billion yuan at the end of the fourth quarter of 2022.

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.