Chinese EV Firm NIO Launches $1 Billion Convertible Bond Financing

Chinese electric vehicle (EV) company NIO Inc (NYSE:NIO) has experienced a 4% drop in its stock price following the launch of a $1 billion convertible bond financing. The bonds are expected to have split maturity, with half due in 2029 and half in 2030. Details regarding interest rates and equity conversion terms have yet to be disclosed.

The funds raised from this financing will be used to repay existing debt facilities and strengthen NIO’s balance sheet. In early premarket trading, NIO’s NYSE-listed American depositary receipts traded at $9.86 per share, 4.36% lower.

Despite growing losses, NIO has been gaining momentum in international sales. Along with other Chinese EV companies, NIO is making headway in the European and North American markets with its comparatively cheaper models compared to Tesla’s high-end price range.

Renault CEO, Luca de Meo, recently stated that Chinese EV brands are ahead of their European counterparts by a generation. The Chinese brands’ competitive advantage lies in their expertise in the electric vehicle supply chain. De Meo emphasized the need for European manufacturers to close the cost gap and catch up quickly.

These comments were followed by an ‘anti-subsidy’ investigation launched by the European Union into Chinese EV makers. European Commission President, Ursula von der Leyen, highlighted the importance of the EV sector for Europe’s economy but expressed concerns about the market being flooded with cheaper Chinese electric cars that are artificially priced low due to significant state subsidies. She referred to the distortion in the market caused by the subsidy support, drawing parallels with China’s impact on the European solar industry through unfair trade practices.

Sources: None