Almost at the last moment, Nio was once again getting the long-awaited funding: more than 10 billion yuan. The capital market gave positive feedback, and the pre-market share price rose over 33%.
Li Bin, founder, chairman and CEO of Nio, once said that his greatest strength is to be able to rescue himself from the edge of a cliff.
On February 25, Nio announced a framework agreement with the Hefei Municipal Government, which did allow Nio to stay on the stage and continue to compete.
Nio's financing is extraordinary. This incident means that Nio has finally opened up the RMB financing channel and achieved Li Bin's goal of obtaining a domestic government industrial investment fund.
According to Chinastarmarket, Li Bin said Nio will not release new models this year, and at the same time, measures to reduce costs and improve efficiency will continue, with the focus on further promoting sales of the EC6 and the entire line of ES8.
On February 25, the news that Nio signed a framework agreement with Hefei City, shocked the industry and quickly swipe the screen.
In response, the capital market responded positively.
On the night of Beijing time, Nio rose over 33% before the market opened. At the close, despite the plunge in U.S. stocks, its increase still reached 13.92% ($4.42), and the market value increased by 4 billion yuan to 32.597 billion yuan.
Chinastarmarket quoted Li Bin as saying that under the framework agreement, Nio will finalize over 10 billion yuan in financing in two months.
Li Bin did not disclose the specific amount of the funds, but according to Chinastarmarket, the size of the financing was about 14.5 billion yuan (about 2.068 billion US dollars).
This funding will significantly ease Nio's tight funding chain.
Nio's third quarter 2019 financial report shows that as of September 30, 2019, the total cash, cash equivalents, restricted cash and short-term investments held by Nio was 1.907 billion yuan (about 274 million US dollars).
Even if Nio's capital consumption is estimated in the first quarter of 2019, from September 30 last year to March 31 this year, Nio will need 181.6 million US dollars, and its book capital is only 274 million US dollars. The capital chain is already in danger.
Looking at the rate of Nio's capital consumption in the third quarter of last year, 14.5 billion yuan will be able to support about 10 quarters, or 2.5 years.
As far as the current situation is concerned, Nio's rate of capital consumption may slow down, and funding pressure may be reduced accordingly.
This year Nio's focus is on advancing sales of EC6 and the entire line of ES8. The EC6 delivery plan in September this year remains unchanged.
Nio co-founder and president Qin Lihong told reporters on December 29, 2019, "Avoiding the company's bloated body is a long-term thing."
Regarding the reasons for choosing Hefei, Li Bin told reporters, "We belong to a situation that both parties are more familiar with. Our cooperation with Jianghuai Automobile has been implemented on a large scale, and it has been for several years."
"More importantly, Hefei's increasingly important strategic position in the integration of the Yangtze River Delta. Whether it is the foundation of the automotive industry or the technical foundation of artificial intelligence, software and electric vehicles, it is also very solid. In addition, we have a strong understanding of Hefei and Anhui Province. Business environment is also very satisfactory. "
In April 2016, Nio and Jianghuai signed a strategic cooperation agreement because Jianghuai Automobile has vehicle manufacturing experience and holds production qualifications. The two parties initially confirmed that the production and sales plan is 50,000 vehicles per year, and the NioES8 model is manufactured by Jianghuai. Subsequently, the two sides jointly built the Nio Hefei plant, namely JianghuaiNio.
On February 25, JianghuaiNio launched the smart electric coupe SUV EC6 mass production project, which is the third model of JianghuaiNio mass production. EC6 is expected to announce the price and configuration in July 2020, and delivery will begin in September.
It is worth noting that in recent years, Hefei's deployment in advanced manufacturing has been fast, and its industrial environment has been well recognized by the industry.
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