Li Bin, the founder of NIO, who was still immersed in the joy of a 150 degree battery pack with a range of over a thousand kilometers for long-distance testing, was once again mocked by the media the next day - NIO "always manages to find money at critical moments.".
On December 18th, NIO announced a new round of share subscription agreement with Abu Dhabi investment firm CYVN Holdings. CYVN Holdings will make a strategic investment of approximately $2.2 billion in cash to NIO through its subsidiary CYVN Investments. According to the agreement, CYVN subscribes to 294 million newly issued Class A common shares of the company at a purchase price of $7.50 per share.
This is also the second time in nearly five months that NIO has received investment from CYVN. In July this year, NIO Automobile received a strategic equity investment of $738.5 million from CYVN. In addition, CYVN purchased several A-class common shares of NIO Automobile from an affiliated company of Tencent Holdings, a shareholder of NIO, for a total consideration of $350 million. After completing the investment, CYVN will beneficially hold approximately 20.1% of the total issued and outstanding shares of NIO, becoming the largest shareholder of NIO. However, it is worth noting that Li Bin still holds 39% of NIO's super voting rights, making him the largest shareholder with voting rights in the company.
In addition to the aforementioned financing, NIO also completed the issuance of convertible senior bonds with a total principal amount of $1.15 billion in September and October. The financial report shows that as of September 30, 2023, NIO Automobile's cash flow has improved, with cash and cash equivalents held at the end of the third quarter of 45.2 billion yuan, an increase of 13.7 billion yuan compared to the second quarter.
Despite an increase in cash reserves, NIO's asset liability ratio remains at 80.78%, an increase of nearly two percentage points from the second quarter, taking into account accounts payable (28.12 billion yuan), short-term debt (4.833 billion yuan), and long-term borrowing (5.232 billion yuan) in the third quarter. If sales do not improve in the short term, NIO Automobile will still face significant cash flow pressure.
At the same time, NIO Automobile has not spent a penny less on necessary expenses. NIO's research and development expenses in the third quarter were 3.04 billion yuan, a year-on-year increase of 3.2%, and exceeded 3 billion yuan for four consecutive quarters; The sales and general administrative expenses were 3.609 billion yuan, a year-on-year increase of 33.1%.
On December 5th, NIO and JAC Motor jointly announced that NIO would acquire inventory, fixed assets, and ongoing construction of JAC Motor Passenger Vehicle Company's third factory for 3.158 billion yuan, as well as the structures and equipment of the new bridge factory of the passenger vehicle company. This change is bound to have a significant impact on NIO's short-term cash flow and fund reserves.
Therefore, reducing unnecessary expenses and continuing financing are the two paths that NIO Automobile must choose. On November 3rd, Li Bin issued an internal letter to all employees, mentioning that NIO will carry out adjustments related to organizational and resource investment directions, including reducing around 10% of redundant personnel and institutional settings. For this reason, Li Bin admitted during the third quarter report conference call that NIO has paid hundreds of millions of yuan for this.
While "saving money" and "changing money", NIO is also strengthening its main business capabilities. On December 17th, Li Bin drove the ET7 from Shanghai and personally tested the endurance of the 150 degree battery pack, which took over 14 hours. The final driving distance was 1044 kilometers, but at this time, the remaining battery was 3%, and it is expected that the vehicle can still travel more than 30 kilometers.
Li Bin also revealed some details about the 150 degree battery pack during the live broadcast. As the world's first thermal runaway free soft pack CTP battery, its battery cells are independently developed by NIO, with an energy density of 360Wh/kg. It is currently the product with the highest power and energy density that can be mass-produced in China. Li Bin stated that all models on the first and second generation platforms have completed the 150 degree battery pack verification announcement, and the team has conducted various tests. The performance, such as range, has exceeded expectations and is expected to be mass-produced in April 2024. In addition, on December 23rd at NIO Day, NIO will also release the all-new executive flagship sedan ET9.
At the end of November, NIO Automobile signed agreements with two major automotive companies, Changan and Geely, to engage in strategic cooperation on battery swapping business. "We will open up the battery packs and battery swapping stations of mass market brands to our partners. Currently, the charging station business has basically reached a breakeven point, and there are also investors interested in independent financing from NIO Power, which cannot be ruled out," said Li Bin.