China-based smart electric vehicle maker NIO Inc's (NYSE:NIO) stock was trading up over 8% in premarket trading on Monday after the EV maker secured a strategic investment.
NIO and CYVN Holdings will jointly be pursuing strategic and technology collaborations in international markets. Chinese EV makers are riding a wave of expansion into Europe, capitalizing on a cost advantage as demand in China slows and Western competitors adopt the new technology more slowly. NIO is reportedly launching its cheaper Firefly brand in Europe in 2025.
However, the European Union is examining imports of Chinese EVs to determine if they contravene competition rules.
According to the announcement on the company's website, NIO has entered into a share subscription agreement with CYVN Holdings L.L.C., through its affiliate CYVN Investments RSC Ltd, an investment vehicle based in Abu Dhabi. Per the agreement, CYVN will invest an aggregate of $2.2 billion in cash to subscribe for 294,000,000 newly issued Class A ordinary shares of NIO at $7.50 per share.
Earlier in July, CYVN made a $738.5 million strategic equity investment in NIO. The additional December investment transaction makes CYVN a beneficial owner of approximately 20.1% of the company's outstanding equity.
"With the enhanced balance sheet, NIO is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities," said William Bin Li, founder, chairman and CEO of NIO.
Read: What's Going On With Nio Stock?
The chart above compares NIO stock with KraneShares MSCI China Clean Technology Index ETF (NYSE:KGRN). NIO has underperformed the KGRN over the past 1 year.
NIO commands 9.93% of the KGRN portfolio as of Dec. 14. Other large holdings of the KGRN ETF include XPeng Inc (NYSE:XPEV) at 8.68%, Li Auto Inc (NASDAQ:LI) at 8.66%, and BYD Co Ltd (OTCPK:BYDDF) (OTCPK:BYDDY) at 7.68%.
Read Next: Nio Gears Up To Produce Its Own EVs After Buying Partner's Factories
Photo: Nio
