Tough times call for some difficult decisions. And Chinese EV maker NIO came up with a new way to raise some needed cash.
On Sunday, NIO announced it sold a portion of its battery-swapping business to Chinese EV maker Geely. The sale will raise about $100 million. In return, Geely will own about 30% of the battery-swap business.
EVs, of course, don't have gas tanks. They plug into an electrical outlet to refill their tanks. Charging speeds have always been a concern for EV makers. Recharging batteries takes longer than pumping a few gallons of gasoline. NIO overcame that by introducing battery swapping. A NIO vehicle can swap out batteries like changing the AAAs in a TV remote control.
NIO has thousands of battery swapping stations in China, and NIO drivers have changed batteries more than 100 million times.
As part of the deal, NIO is also taking a 10% stake in Geely's charging business, and Geely has an option to provide more cash in subsequent capital raises by NIO.
NIO stock was up 1.4% in early trading at $3.63, while the S&P 500 and Dow Jones Industrial Average were down 0.5% and 0.6%, respectively.
Gains leave NIO stock down 29% year to date and off 48% over the past 12 months. Brutal price competition from dozens of Chinese auto makers has hurt growth and profits.
NIO isn't consistently profitable yet, and the cash will help. Wall Street expects positive free cash flow of about $100 million in 2025, the first full year of positive free cash flow at the company.
That's an impressive milestone, but industry competition has hit results. A year ago, analysts projected 2026 free cash flow of $300 million.
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