Chinese used car dealer Uxin said Tuesday it has signed a definitive agreement with Chinese electric vehicle (EV) maker NIO's venture capital arm NIO Capital and Joy Capital, with the two investors agreed to invest a total of $315 million in the company.
Uxin also reached an agreement with its convertible bond holders, including 58.com, TPG, and Warburg Pincus, to convert an aggregate principal amount of $69 million of its convertible bond into Uxin's Class A common stock.
More than 10 major investors, including NIO Capital, Joy Capital, and the holders of these convertible debentures, agreed not to sell their holdings of Uxin's stock for the next nine months.
William Li, Chairman of NIO and Partner of NIO Capital, said that the used car market in China has the potential for exponential growth and believes Uxin will continue to lead the development of the used car market in China and help the industry reach new heights in quality and reliability.
Liu Erhai, founding and managing partner of Joy Capital, said the used car market in China is exciting and that he was impressed with the Uxin management team.
Uxin opened up about 7 percent on Tuesday, but then the stock fell, extending its decline to about 13 percent by the close of trading. The stock is still up 406.74 percent so far this year.
Notably, the investment is expected to deepen Uxin's partnership with NIO, despite the fact that its shares plunged after the news was announced.
NIO launched its official used car business, NIO Certified, at the beginning of the year to provide high-quality services to used car users through self-management, and has committed RMB 3 billion to the business over five years.
NIO has established a nationwide used car business network, providing the whole process of vehicle inspection, evaluation, acquisition, and sale.
In the used car acquisition segment, NIO promises to provide users with market-competitive pickups and efficient appraisal and quotation services.
In the sales process, NIO has set strict quality control standards, saying that all used cars have undergone 286 special tests for new energy models.