Tesla challenger Nio gets $2.2 billion investment from Abu Dhabi’s CYVN

By CNN Newsource

Published December 18, 2023 9:19 PM

By Juliana Liu, CNN

Hong Kong (CNN) — Chinese electric vehicle (EV) maker Nio has secured $2.2 billion in investment from CYVN Holdings of Abu Dhabi, giving the Tesla challenger a longer financial runway as it seeks to make inroads in an increasingly competitive market.

The deal, which follows a previous $1 billion investment from CYVN in July, will give the Emirates-based firm a 20% shareholding in Nio (NIO), the Shanghai-based EV upstart said in a Monday statement. CYVN will also be able to nominate two directors to Nio’s board.

“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,” said William Bin Li, founder and chief executive officer of Nio in the statement.

Founded in 2014, loss-making Nio trails BYD (BYDDY) and Tesla (TSLA) in China’s cutthroat EV market.

Bill Russo, founder of Shanghai-based consulting firm Automobility, said the EV maker is in 10th place in China. He says that, like others, Nio has had to slash prices after Tesla started a price war over the past year.

Elon Musk’s company started cutting prices in October 2022 in China, the world’s largest EV market, after it lost market share to competitors such as BYD. It has repeatedly slashed prices on its China-made cars this year.

Tesla reported a drop in third-quarter earnings in October, which analysts attributed to price cuts affecting profit margins, even as the company maintained that it had had success in trimming the cost of each 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.

“On top of that, they’re trying to go global,” he said. “That has required a lot more capital than their sales have been able to support.”

Nio has been offering battery swapping for its vehicles since 2019. It now claims to be the world’s largest operator of battery swapping technology having performed over 32 million battery swaps since then at more than 2,100 stations.