Tesla rival Nio secures $2.2bn investment from Abu Dhabi fund
UAE investment vehicle CYVN takes 20% stake in Chinese group as Beijing’s ties with Middle East groups deepen
Tesla rival Nio has secured a $2.2bn investment from Abu Dhabi-backed CYVN Holdings in a boost for the Chinese electric vehicle maker as Middle East groups and Beijing increasingly join forces in the clean tech transition.
The deal, which follows CYVN’s more than $1bn injection in Nio in July, will give the UAE investment vehicle 20 per cent of the Chinese group’s shares and is intended to ease worries among some analysts over the lossmaking company’s finances.
The strengthening corporate ties between China, the world’s biggest car market, and the Middle East is a growing trend as Beijing steps up its challenge to Washington’s dominance in the region.
Nio listed in 2018 on New York’s Nasdaq exchange, but has struggled with heavy financial losses, production problems and the high costs of rolling out its battery swapping system — the technology at the heart of its business plan — and luxury showrooms.
The battery swapping system involves unscrewing the bottom of the car and replacing the battery through a hatch in the floor, which takes about five minutes.
Nio believes the technology, which could be sold to other groups, offers a way to overcome worries among consumers about EV charging times and long-term battery health.
Despite a strong end of the year for China’s EV market, Nio has been hit by price cuts as the fight for market share intensifies.
The CYVN injection comes days after co-founder and president Lihong Qin said higher interest rates were making it harder to raise money.
“We are looking for new investors, and financing is one of our daily jobs,” he said last week. “It never stops, it’s just that currently the global financial policy environment has made this work more challenging.”
He added that Nio had “not become profitable yet” and currently lost about $12,000 for every car it sells.
“We definitely face a lot of challenges, but do not have concerns for short term survival,” he stressed.
The company is expanding among a clutch of Chinese auto groups in Europe, with plans to launch a cheaper brand in the region in 2025.
The business, however, had also deferred plans to enter the US market because of the “urgency of profitability” as well as the tariffs and the costs of certifying vehicles, Qin added.
Nio will focus exports on Europe, where auto regulations are much closer to those in China, which lowers the costs of adapting its vehicles for the market.
It has also entered a partnership with Geely and Chang’an in China to work together on battery swapping.
Analysts have argued it will be hard for the company to make battery swapping a viable technology without extensive partnerships to widen the system’s appeal.
Monthly sales of plug-in hybrid and pure battery cars in China rose above 1mn for the first time in November, according to data from Automobility, a Shanghai consultancy.
China produced 8.3mn EVs in the first 11 months of the year, a record that far outpaces the US and Europe, with pure battery EVs rising to 5.9mn and plug-in hybrids to 2.4mn.