On January 16th, GAC Group issued a clarification announcement: “GAC Group plans to invest $1 billion in NIO cars” media reports are not true, the two sides are currently discussing NIO’s financing plan, but still in its early stages, no binding agreement has been formed. Recently, online media reported that GAC plans to invest in NIO AUTO, and the size of NIO financing has reached 1 billion U.S. dollars.
For this matter, NIO Automobile and yesterday has expressed, said: “on financing projects please take the announcement of listed companies as the basis.” Nio Motors’ share price rose sharply yesterday, jumping 14 per cent to $4.5bn in the close of trading.
In fact, NIO can get GAC’s investment is also reasonable, the relationship between the two is already more intimate than the ordinary car companies. As early as April 2018, the two sides funded the establishment of a joint venture – GAC NIO. In December 2019, GAC NIO’s HYCAN co-creation brand released the first pure electric SUV, HYCAN 007, with a pre-sale price range of 26-40 million yuan for the new car, and its NEDC with a range of 643 kilometers.
Why NIO has such a high demand for financing is mainly related to the poor financial position of the group. According to NIO’s latest third-quarter 2019 financial results, NIO Group’s net loss was RMB2,521.7 million (US$352.8 million), and its total cash, cash equivalents, restricted-use cash and short-term investment amounted to RMB1,960.7 million (US$274.3 million), which is less than RMB2 billion.
And if GAC’s $1 billion investment plan does come to fruition, it will have a positive impact on NIO cars, which are currently desperately short of money.