Cash-strapped Tesla challenger NIO signs preliminary deal for US$1.4 billion funding
- NIO founder and chief executive William Li Bin vows to continue the electric car maker’s efforts to raise more external financing
Electric carmaker NIO has reached a preliminary agreement with the Hefei government for 10 billion yuan (US$1.4 billion) in funding, including construction of the company’s new headquarters in the city, the capital of eastern China’s Anhui province.
That investment, details of which are expected to be finalised in two months, forms part of the company’s “continued fundraising efforts” through US dollar and local currency channels, said NIO founder and chief executive William Li Bin after the deal was signed on Tuesday.
Under the agreement, Shanghai-based NIO will establish its new headquarters in Hefei, where the company’s ES8 electric sport utility vehicle has been manufactured by state-owned partner JAC Motors – officially known as Anhui Jianghuai Automobile Co – since 2016.
NIO’s latest fundraising initiative comes as sales of new energy vehicles (NEVs) – including electric and plug-in hybrids – in the world’s largest car market have plummeted amid the economic slowdown, the prolonged trade war and the Chinese government’s decision in March last year to reduce subsidies in the industry.
Raising funds has become more critical for NIO, which warned in its December quarterly report that it had no adequate cash for continuous operations this year, amid increased competition from electric car giant Tesla, which has a manufacturing base in Shanghai, and the difficulties posed by the coronavirus outbreak, which has led to communities being locked down and factories halting production.