Nio, the Chinese-based electric car manufacturer, plans on receiving a $1.45 billion investment from a government run fund. Nio plans to see issues in the future as the Chinese government plans to slowly get rid of electric vehicle subsidies.
The Shanghai-based, New York-listed company announced recently it has entered into a framework agreement with Beijing E-Town Capital to establish a new entity, NIO China, in the city's economic-technological development area. E-Town Capital, which invests on behalf of the Beijing municipal government's economic development agency, will acquire a minority stake in NIO China.
The new entity will operate the automaker's main China business and open up yuan-based fundraising channels for the company.
The investment reflects China's continued ambition in the EV industry, even as the government is slashing subsidies. E-Town Capital lists "new energy smart car" as one of four industries it sets out to promote. It has also invested in projects including a joint facility with EV manufacturing capabilities between Germany's Daimler and BAIC Motor in the development zone, as well as BAIC BJEV, the electric vehicle unit of BAIC Group.
In late March, China's Ministry of Finance announced a new EV subsidy scheme with the intention of eventually eliminating such financial support to encourage the survival of the fittest in the industry. Effects of the cuts were immediately felt. NIO, which reported quarterly results Tuesday, experienced a worse-than-expected slowdown in deliveries of its ES8 car in April.
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