Chinese electric vehicle (EV) maker Nio has secured a $2.2 billion investment from Abu Dhabi’s CYVN Holdings, 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% stake in Nio (NIO), the Shanghai-based EV upstart said in a statement on Monday. CYVN will also be able to nominate two directors to Nio’s board.
“With the strengthened balance sheet, Nio is well prepared to sharpen its brand positioning, strengthen its sales and service capabilities, and make long-term investments in core technologies to navigate the increasingly competitive landscape,” William Bin Li, founder and chief executive officer of Nio, said in the statement.
Founded in 2014, loss-making Nio trails BYD (BYDDY) and Tesla (TSLA) in China’s fiercely competitive electric vehicle market.
Bill Russo, founder of Shanghai-based consultancy Automobility, said the EV maker ranks 10th in China. He says Nio, like others, has had to slash prices after Tesla started a price war last year.
Elon Musk’s company started slashing prices in China, the world’s biggest EV market, in October after losing market share to rivals such as BYD. It has repeatedly cut prices on its China-made cars this year.
Tesla reported a drop in third-quarter earnings in October, which analysts blamed on price cuts hitting margins, although the company claimed it had been successful in reducing the cost of each vehicle.
Russo said Nio will benefit from the new investment because it has “spread itself pretty thin” by doing many things at once: launching new products, expanding its battery swapping infrastructure and setting up showrooms in premier 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 swaps for its vehicles since 2019. It now claims to be the world’s largest operator of battery swapping technology, having since completed more than 32 million battery swaps at more than 2,100 stations.
