China’s hottest electric vehicle (EV) maker Nio has been in talks with a local government to raise at least RMB 5 billion (USD 700 million), sources close to the deal told 36Kr.
The party is the government of Huzhou, a city in northern Zhejiang province, the report said. The deal comes with a term that Nio has to build a factory there with an annual production capacity of 200,000 vehicles.
Li Bin, Nio’s CEO and founder, confirmed with 36Kr that the company is now in talks with several local governments, but didn’t disclose further details.
The move shows a strong presence of state-owned funds in the new-energy vehicle industry, as private venture capitalists step away from the cash-burning business. In May, Nio said it’s setting up a joint venture with E-Town Capital, backed by the Beijing municipal government, with the latter slated to inject up to USD 1.5 billion into the new entity, Nio China.
The timing seems auspicious for the Shanghai-headquartered and New York-listed Nio, which is now deep in the red, the same as a pack of other Chinese EV startups.
Hurt by a series of battery fire incidents in China earlier this year and a massive recall involving nearly 5,000 vehicles afterward, Nio reported a far bigger-than-projected net loss of USD 478.6 million in the second quarter–widening 83.1% from a year earlier.