The move represents a further exit for NIO from its joint venture with Changan after it cut its stake in the company to 4.62 percent late last year.
The joint venture with legacy Chinese auto giant Changan Automobile is part of NIO's efforts to expand the brand's reach, but the electric vehicle (EV) maker doesn't appear to be far from pulling out completely.
Avatr Technology, the premium EV brand created by Changan with Huawei and power battery giant CATL, previously known as Changan NIO, will introduce a new capital injection from a number of companies, according to an announcement made today by the Shenzhen-listed company.
The capital increase will be made in cash, with Changan planning to increase its capital by RMB 500 million, CATL planning to contribute RMB 770 million, and four other investors participating in the capital increase, for a total capital increase of RMB 2.42 billion by all the investors.
Upon completion of the capital increase, Avatr's registered capital will increase from RMB 288 million to RMB 1.17 billion, and Changan's shareholding will dilute from 95.38 percent to 39.02 percent and CATL's shareholding will be 23.99 percent.
NIO did not participate in the capital increase, and its shareholding will be diluted from 4.62 percent to 1.13 percent, the announcement said.
Prior to the capital increase, Avatr remained a joint venture between Changan and NIO, with the former holding 95.38 percent and the latter 4.62 percent. Following this move, NIO's role in the company will be further marginalized.
Previously known as Changan NIO, Avatr, like GAC NIO, was founded three years ago and was seen as a precedent for joint ventures between China's emerging and traditional car companies.
But with NIO in deep financial trouble in late 2019 and early 2020, the two joint ventures are progressing slowly.
(File photo shows Changan and NIO sign deal to form Changan NIO.)
Changan NIO has been in the pipeline for three years, with no products launched so far.
NIO's stake in Changan NIO was sharply reduced from 50 percent to 4.62 percent at the end of last year, while Changan's shareholding increased to 95.38 percent. This is interpreted as NIO's plan to exit the joint venture.
At the end of May this year, Changan NIO announced that it had changed its name to Avatr Technology, a new name that did not carry "NIO", marking the end of the legacy carmaker's efforts to explore joint ventures with the new carmaker.
Changan said in an announcement at the time that Avatr would be fully market-oriented, independently operated and developed.
At the end of August Changan Chairman Zhu Huarong, Huawei Managing Director and Intelligent Vehicle Solutions BU CEO Richard Yu, and CATL Chairman Robin Zeng officially announced Avatr and its first model, the E11.
The E11 will be built on their co-created intelligent electric networked vehicle architecture CHN, where C stands for Changan, H stands for Huawei and N stands for CATL (Pinyin name is Ningde Shidai).
The new vehicle is in the full vehicle commissioning phase and will be unveiled by the end of this year, the company said.
The E11 is a mid-sized SUV that will be equipped with Huawei HI (Huawei Inside) intelligent vehicle solutions and CATL's latest technologies.