NIO

History

2023

Investment from Abu Dhabi State Fund

On December 18, 2023, the state investment fund CYVN Holdings of the Abu Dhabi government announced its intention to invest more than $2 billion in the Chinese developer of smart electric vehicles Nio. Within the framework of the agreement, the parties, as well as their regional structures, will be engaged in "the development of strategic and technological cooperation in international markets."

Under the terms of the contract, CYVN Holdings will sign up for 294 million newly issued Class A Nio ordinary shares. The value of each security is $7.5. Thus, a total of approximately $2.2 billion will be spent. The transaction is planned to be carried out entirely at the expense of funds.

NIO ET7

It is noted that in July 2023, Nio received from CYVN strategic investments in equity in the amount of $738.5 million. In addition, CYVN acquired a $350 million stake in Nio from an affiliate of Tencent Holdings Ltd. After completing the new $2.2 billion deal, CYVN will own approximately 20.1% of the electric car maker's total issued and outstanding shares.

Regulatory approvals are required to complete the transaction. The parties plan to complete the deal in 2023. After that, CYVN will have the right to appoint two of its representatives to the Nio board of directors.

This deal demonstrates our confidence in Nio's unique positioning and competitiveness in the global smart electric vehicle industry. We are pleased to be a long-term strategic partner of this automaker and support its efforts in innovation, technological breakthroughs and expanding its international presence, "says Jassem Al Zaabi, Chairman and Managing Director of CYVN Holdings.[1]

Dismissal of employees

On November 3, 2023, Chinese electric car maker Nio announced a reorganization that would reduce headcount. In addition, the possibility of changing the organizational structure is considered.

As Reuters notes, demand for electric vehicles in China has weakened as consumers prefer more economical hybrids with the ability to charge the battery pack from the electric grid. Sales of these cars during January-September 2023 jumped 84.5% on an annualized basis, which helped automakers such as Li Auto and Byd strengthen their market position. At the same time, Nio was unable to achieve its goals for the sale of electric vehicles, which is why it faced difficulties. Therefore, Nio is forced to go for restructuring, during which the staff will be reduced by 10%.

Nio Announces Reorganization

This is a difficult but necessary decision in the face of fierce competition. We still have a gap between the overall performance and expectations for car sales, "says Nio Chief Executive Officer William Li.

It is noted that "double" and "ineffective" roles will be eliminated. As of the end of 2022, the company had 26,763 full-time employees. Thus, Nio will lay off approximately 2,680 people. In addition, as part of business optimization, it is planned to reduce or suspend investments in projects that will not bring benefits in the foreseeable future. The company can also allocate non-core assets into separate structures. In addition to electric vehicles, Nio's business includes cellular devices, as well as research and development in the fields of batteries and semiconductors. It is expected that all these measures will reduce costs, increase the efficiency of operations and, ultimately, improve the situation in the Chinese market for electrified vehicles.^[2]

Notes