Written by Cláudio Afonso | LinkedIn | X
EV maker Nio said on Thursday it plans to raise fresh capital through the sale of up to 118.8 million Class A ordinary shares in offshore markets. Shares of the carmaker fell 5.92% to $3.97 immediately after the announcement.
Nio will offer 118.8 million shares at HK$29.46 each, representing a 14% discount to its Wednesday closing price, according to the term sheet.
Proceeds from the offering are intended to support “for research and development of smart electric vehicle technologies and new products, further strengthening balance sheet as well as general corporate purposes,” the company said.
The shares will be offered to non-U.S. investors in transactions outside the United States under Regulation S of the U.S. Securities Act, the Shanghai-based company said in a statement.
Last week, amid the report of its fourth-quarter earnings, the company said it would plan its fundraising needs and activities based on operational requirements and market conditions.
Nio posted a wider net loss in the fourth quarter of 2024, even as vehicle margins improved, as the average selling price declined due in part to the addition of lower-priced Onvo brand sales in the final two months of the period.
The EV maker reported a balance of cash and cash equivalents, restricted cash, short-term investment and long-term time deposits of 41.9 billion ($5.7 billion) as of the end of 2024, down 27% year on year and 7% sequentially.
“We have been incurring loss since inception,” Nio said in the earnings report. “We incurred operating cash outflow for the year ended December 31, 2024 and our current liabilities exceeded current assets as of December 31, 2024.”
The Shanghai-based Group said last week it believes its financial resources “will be sufficient to support our continuous operations in the ordinary course of business for the next twelve months.”
“Based on our going concern and liquidity assessment, which considers our business plan including revenue growth, working capital management and the ability to raise funds from banks under available credit quotas when needed, we believe that our financial resources, including our available cash and cash equivalents, restricted cash and short-term investments, cash generated from operating activities and funds from available credit quotas will be sufficient to support our continuous operations in the ordinary course of business for the next twelve months,” Nio stated.
As of the time of writing, Nio shares are sinking 6.40% to $3.95.
Answering a question about fundraising, William Li said last Friday that the carmaker “will be planning our fundraising requirements and activities according to the operations of the company as well as the changes in the market.”
“Regarding your second question on the fundraising, we have various options. We have a various fundraising channels for the capital market, for the US capital market, RMB capital market, public or private, we will be planning our fundraising requirements and activities according to the operations of the company as well as the changes in the market.”
As recently reported, the EV maker has recently scaled up its cost cutting measures and the controls in each project both in China and in its international markets.
“Basically, we ask all the teams and employees to take ownership and accountabilities of the company’s operational targets,” Li explained. “We already have seen some good results and actions taken voluntarily by the R&D teams, by the sales and service teams in reducing the cost and improving the efficiency.”
“The results of such actions will be reflected in our balance sheet in the coming quarters starting in the second quarter as we continue to strengthen our cost control and also expenses management in the second half of this year, together with improvements in the sales volumes in the vehicle margin as well as in the expense control,” Li stated before reaffirming the goal of achieving single quarter profitabily in the last quarter of this year.
“We are confident that we are going to achieve our breakeven target in Q4,” the CEO stated.
Later in the call, the chief executive was asked direclty about the company’s cash reserves and revealed that the Group will “see major improvement in the operating cash flow” starting from the second quarter.
“In Q1, as we see the decrease in the sales volume quarter over quarter, we did experience an operating cash outflow,” Li stated. “Yet, as we have introduced that this year will be a pivotal year for our product launch as we witness the rebound starting Q2, we will also see major improvement in the operating cash flow.”
Li reminded that the company “conducted a series of adjustments and also streamlining activities” which are expected to be “reflected in our performance, financial performance starting Q2.”
In conclusion, the Group’s chief said it “will be prudent with our cash flow management to make sure that our resources can sustain our continuous growth and development.”
