The $2.2 billion investment from CYVN Holdings of Abu Dhabi has given Chinese electric vehicle (EV) manufacturer Nio a longer financial runway as it looks to gain traction in a field that is becoming more and more competitive.
The Shanghai-based EV startup said in a statement on Monday that the agreement, which comes after a prior $1 billion investment from CYVN in July, will give the Emirates-based company a 20% interest in Nio (NIO). It will also allow CYVN to propose two candidates for Nio’s board of directors.
William Bin Li, the company’s founder and CEO, said in a statement, “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, loss-making Nio is lagging behind rival EV companies BYD (BYDDY) and Tesla (TSLA) in China.
The EV manufacturer is ranked 10th in China, according to Bill Russo, head of the Shanghai-based consultancy firm Automobility. According to him, Nio had to lower prices along with everyone else when Tesla initiated a pricing war a year ago.
After losing market share to rivals like BYD, Elon Musk’s company began lowering prices in October 2022 in China, the largest EV market in the world. This year, it has cut the price of its cars manufactured in China several times.
Analysts ascribed Tesla’s lower third-quarter results in October to price reductions that had an impact on profit margins, despite the company’s insistence that it had successfully reduced car costs.
The new investment, according to Russo, would help Nio as it has been “spreading itself quite thin” by taking on multiple projects at once, including the introduction of new products, the expansion of its infrastructure for battery swapping, and the establishment of showrooms at prestigious sites throughout China.
He added, “On top of that, they’re trying to go global.” “Their sales have not been able to support the amount of capital that has been required.”
Nio began providing battery replacements for its cars in 2019. With over 32 million battery swaps completed at over 2,100 stations since then, it now holds the title of largest battery swapping technology operator in the world.