China’s NIO (NIO) just received a $470 million cash investment as it prepares for its next phase of growth. With new funding and the launch of its low-cost Onvo brand, NIO is laying the foundation for accelerating sales.

NIO receives a significant cash injection to drive EV growth

NIO China, NIO’s subsidiary, announced the new cash investment on Sunday. The electric vehicle maker raises a total of RMB 3.3 billion (US$470 million) in funding from three investors.

The statement said Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co and GS Capital will invest nearly half a billion in NIO China for newly issued shares.

The cash investment is made in two installments. About 70% will be invested by the end of November 2024, while the remaining 30% will be made by the end of December 2024.

With an “improved balance sheet,” NIO is “strategically positioned” and has long-term advantages in technology, products, services and user community.

Following the transaction, NIO will own 88.3% of NIO China shares, up from 92.1% currently.

In addition, NIO’s parent company has the right to invest an additional 20 billion RMB (US$2.9 billion) in NIO China until December 31, 2025.

NIO stock is on the rise

NIO will use the new cash investment to support its new multi-brand strategy, expand into new markets and take the company into the next phase of sustainable growth.

The L60 electric SUV, the first vehicle from NIO’s new low-cost brand Onvo, was launched earlier this month.

The L60, which starts at just $21,200 (249,900 yuan), is widely seen as a true competitor to Tesla’s best-selling Model Y.

Since the launch of the Onvo L60, NIO stock has risen over 70% in the last month. However, stock prices are still down 17% in 2024 and over 85% below their all-time high of over $62 per share in February 2021. Following the news, NIO stock is trading at just under $7 per share.

NIO has received several improvements and praise after the launch of its new electric SUV. Deutsche Bank analyst Wang Bin’s team said in a note to investors last week that the L60 paves the way for a “brand revival.”

Bin’s team claimed initial feedback from traders had been “very strong”. As a result, they increase the monthly delivery forecast from 8,000 to 10,000.

In a new research note sent to investors on Sunday (via CnEVPost), the team said the new funding “reduces some investor concerns about the immediate share dilution” of NIO stock. Bin’s team expects the NIO share price to “react positively” following the new cash injection.

After delivering an additional 20,176 vehicles last month, NIO has surpassed the 20,000 vehicle sales mark for the fourth consecutive month as momentum builds.