Nio, the Tesla of China, surges 35% after confirming talks for $1.4 billion in government funding
- Nio, one of Tesla's main competitors in China, announced Tuesday it is in talks with the government of Hefei for more than $1.42 billion in funding for expansion in the city.
- Shares of Nio surged as much as 35% on the news.
- Nio will share further details in the next few months, according to a Reuters report. The agreement with Hefei is part of the city's plans to combat coronavirus and support the economy, according to CNBC.
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One of Tesla's main competitors in China is a step closer to securing funding for additional plants in the region.
Shares of Nio surged as much as 35% in early trading Tuesday after the company confirmed that it is in talks with the municipal government of Hefei, where its main manufacturing hub is located. Nio is looking to raise more than 10 billion yuan, or $1.42 billion, Reuters reported.
Under the preliminary agreement, the Hefei government expects to provide resources and funding support for the long-term growth of Nio in the city, the capital of the Anhui province, according to a press release. In turn, Nio said it "plans to establish Nio China headquarters, further expand its operations and deepen its relationship with local ecosystem partners in Hefei."
The electric-vehicle company has been short on cash and struggling to raise capital amid China's slowing auto market. In February alone, Nio has issued $200 million of short-term convertible notes in two rounds to bring in enough cash to meet its needs.
Nio will provide additional details in the next two months, Reuters reported. The company's agreement with Hefei is one of eight major deals the city has signed in efforts to control the spread of coronavirus and support economic development, CNBC reported, citing a translation of the city's government website.
Nio has shed nearly 4% year-to-date through Monday's close.
