- Nio plans to issue up to 118,793,300 class A ordinary shares in offshore transactions outside the US to non-US persons.
- Nio plans to use the new financing for R&D of EV technologies and new products, to further strengthen the balance sheet and for general corporate purposes.
Nio (NYSE: NIO) announced plans to issue new shares to raise funds after it flagged possible financial stress in its fourth-quarter earnings report.
The electric vehicle (EV) maker announced today that it plans to issue up to 118,793,300 class A ordinary shares in offshore transactions outside the US to non-US persons.
The company currently plans to use the net proceeds from the equity placement for research and development of EV technologies and new products, further strengthening of balance sheet and general corporate purposes, Nio said in a statement.
There can be no assurance that the equity placement will be completed, Nio noted.
Following the announcement, the company's American Depositary Shares (ADS) traded in the US fell in Thursday's pre-market trading session, down 6.64 percent to $3.94 as of press time.
If the planned new share placement is fully completed, Nio would raise up to $475 million, assuming a trading price of $4 per share.
The company's ADSs each represent one ordinary share.
Nio has seen weak car deliveries in the past few months, as deliveries of the first model from its sub-brand Onvo, the L60 SUV (sport utility vehicle), have been lower than expected.
The company's financial situation is under pressure and the risk was flagged in its fourth-quarter earnings report published on March 21.
As of December 31, 2024, Nio's current liabilities exceeded its current assets, but it had sufficient financial resources to support its operations in the next 12 months, the company said in the earnings report.
Nio wrote at the time:
We have been incurring loss since inception. We incurred operating cash outflow for the year ended December 31, 2024 and our current liabilities exceeded current assets as of December 31, 2024.
Based on our going concern and liquidity assessment, which considers our business plan including revenue growth, working capital management and the ability to raise funds from banks under available credit quotas when needed, we believe that our financial resources, including our available cash and cash equivalents, restricted cash and short-term investments, cash generated from operating activities and funds from availa-ble credit quotas will be sufficient to support our continuous operations in the ordinary course of business for the next twelve months.
Nio underwent a new organizational change at the beginning of this year and introduced an internal management mechanism called CBU (Cell Business Unit) in an attempt to improve operations.
The company's management said in a previous earnings call that Nio's goal is to become profitable in 2026.
This year, Nio founder, chairman, and CEO William Li emphasized several times to his employees that the company's goal is to achieve single-quarter profitability in the fourth quarter of 2025.
If profitability is not achieved as expected in the fourth quarter of this year, it will be a major test for Nio's long-term development and business model, Li said in an interview with local media on March 23.
Achieving profitability is not a complicated matter, just increase sales and keep the gross margin and expenses at reasonable levels, he said at the time.
He also mentioned that Nio has strict financial discipline, with intangible assets of only over $4 million. "We have expensed all research and development costs in the reporting periods and not capitalized them, which makes our accumulated losses appear higher and our assets appear low-er."
This lays a good foundation for achieving profitability in the future, because the investment has been completed in the past, and the next step is to enter the harvest period, he said.
Below is Nio's statement about the planned new share offering.
SHANGHAI, China, March 27, 2025 (GLOBE NEWSWIRE) -- NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) (“NIO” or the “Company”), a pioneer and a leading company in the global smart electric vehicle market, today announced that it proposes to offer up to 118,793,300 Class A ordinary shares of the Company (the “Placement Shares”) in offshore transactions outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), subject to market conditions and other factors (the “Equity Placement”).
The Company currently plans to use the net proceeds from the Equity Placement for research and development of smart electric vehicle technologies and new products, further strengthening balance sheet as well as general corporate purposes.
The Placement Shares have not been and will not be registered under the Securities Act or any state securities laws or be registered in Hong Kong or elsewhere.
They may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
They will not be offered to any members of the “public” (within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong), or in Singapore.
This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any securities, in the United States, Hong Kong, Singapore or elsewhere, and shall not constitute an offer, solicitation or sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.
This press release contains information about the pending Equity Placement, and there can be no assurance that the Equity Placement will be completed.
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