Chinese battery giant CATL (SHE: 300750) is in talks to buy a controlling stake in Nio Power, the power unit of Nio (NYSE: NIO), Reuters said in a report today, citing four people familiar with the matter.
CATL made the proposal after announcing an investment of up to RMB 2.5 billion yuan ($342 million) in Nio Power in March, the sources said.
The sources did not say how much CATL was offering under the proposed deal. However, one of the sources said Nio Power was valued at more than RMB 10 billion in a 2024 funding round.
Nio announced a new partnership with CATL on March 18 to build the world's largest battery swap service network.
The two companies would also engage in capital cooperation, with CATL advancing an investment of up to RMB 2.5 billion in Nio Power, Nio said at the time.
Founded in May 2017 in Wuhan, Hubei province in central China, Nio Power was initially wholly owned by Nio and legally represented by the electric vehicle (EV) maker's vice president, Shen Fei.
Shen began his role as president of Nio's sub-brand Onvo last week and is no longer head of Nio Power.
Nio CFO Stanley Qu also serves as head of Nio Power and is responsible for all aspects of the unit, reporting to Nio founder, chairman and CEO William Li.
In May 2024, Nio announced that a Hubei government fund had made a RMB 1.5 billion strategic investment in Nio Power, the first external investment in the division.
On June 6, 2024, Nio's management said in an earnings call that Nio held an equity stake of around 90 percent after Nio Power received its first external financing.
This meant that Nio Power was valued at around RMB 15 billion at the time.
In CATL's latest investment, Nio Power's valuation was lowered to about RMB 10 billion, according to a March 20 report by local media outlet 36kr.
This means that if CATL invests RMB 2.5 billion in Nio Power, it is expected to get a 25 percent stake, the report said.
CATL had also been interested in taking over other shareholders' stakes in Nio Power to gain more say, the 36kr report said.
Nio is one of the biggest players in the battery swap space, with 3,245 battery swap stations in China and 60 stations overseas, according to data compiled by CnEVPost.
CATL, the world's largest supplier of power batteries, also entered the battery swap space in January 2022 and on December 18, 2024 announced ambitious plans aimed at standardizing swapable batteries.
CATL unveiled two standardized Choco-SEB packs in December, naming them #20 and #25, just as gasoline is available in the Chinese mainland as #92, #95, and #98.
The battery maker said at the time that the long-term goal was to see it reach 30,000 battery swap stations.
On April 2, CATL announced that it would build over 500 swap stations with oil giant Sinopec Group within this year, with a long-term target of 10,000 stations.
CATL is a supplier to Nio and one of the main proponents of the EV maker's battery swap model.
In August 2020, Nio launched its BaaS (battery as a service) battery rental business, and Mirattery, a joint venture between CATL, Nio, Guotai Junan and Hubei Science Technology Investment, is the manager of these battery assets for rental.
When Mirattery was founded, it was owned 25 percent by each of the four initial investors.
After shareholding changes over the past few years, Nio is now the largest shareholder with a 19.4 percent stake, while CATL and Hubei Science Technology Investment are tied for the third-largest shareholding at 10.68 percent each.
In its March 20 report, 36kr cited a source as saying CATL was increasing its bet on Mirattery, but the additional investment may not be as much as RMB 2.5 billion.
CATL would gain more equity if it moves forward with its bet on Mirattery, the 36kr report noted.
($1 = RMB 7.3125)
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