Registered capital for electric vehicle maker Nio swelled to RMB 3.85 billion (around $540 million) from a mere RMB 11 million on Tuesday, in a sign that the company’s fortunes are finally turning around after a bailout deal in April worth RMB 7 billion.
Why it matters: Just a few months ago, Nio was cutting costs to stretch its cash reserves. Now with this capital injection, the EV maker is poised for growth—monthly production capacity will surge 25% from current output to 5,000 vehicles in September.
- Shares have been climbing for five consecutive days, gaining 6.6% on Thursday to close at $5.97, a 400% rebound from the lowest point of $1.19 in October.
Details: Nio on Tuesday increased registered capital for Nio (Anhui) Holding Ltd. to around RMB 3.85 billion from RMB 11 million, according to Chinese business research platform Tianyancha.com. It also made a series of moves to restructure its network of legal entities.
- In April, in preparation to receive funds from its bailout by the Hefei government, the company began forming its new China entity. It renamed a former sales subsidiary as Nio (Anhui) Holding Ltd., a wholly foreign-owned enterprise.
- Nio is currently restructuring its businesses in China in accordance with the investment agreement, transferring its core businesses and assets to Nio China, a company spokesperson told TechNode on Friday.
- These include vehicle research and development, supply chain, sales and services, and recharging service Nio Power, the company said.
- Nio (Anhui) Holding Ltd. now has control over 32 of Nio’s enterprises in China, according to Tianyancha.com.
Context: In a final agreement reached by the company and a group of state-owned investment firms in late April, investors will inject a total of RMB 7 billion in cash into Nio (Anhui) Holding Ltd., Nio China’s legal entity, for a 24.1% stake.
- Meanwhile, Nio will invest RMB 4.26 billion in the new entity for the rest of the shares. The investment will be made in five installments over a year or so, with the first installment of a combined RMB 4.8 billion due within five working days of the deal closure.
- The EV company is on track to deliver its third electric SUV model in September. The EC6 is a sport coupe with a range of 615 kilometers (382 miles) per charge.
Bottom line: This may be the struggling EV maker’s turning point.
- On Thursday, the company reported record-breaking deliveries of 3,436 vehicles in May, more than three times the deliveries in the same month last year, and the highest ever since the company began delivering cars in mid-2018.