Electric Vehicle Market Resources
Chinese Electric Car Manufactuer Stock Price Driving Higher
February 26 2020 - Chinese Electric Car Maker Jumps On Tentative Deal For Big Cash Infusion By Investors Business Daily
Cash-strapped Nio (NIO) announced tentative deals for new funding and manufacturing plants with a city in China. Nio stock surged.
Electric SUV maker Nio announced Tuesday it has signed framework agreements with the municipal government of Hefei to raise roughly 10 billion yuan, or $1.42 billion. The so-called Tesla (TSLA) of China also plans a headquarters in Hefei, as well as research centers and assembly plants.
More details will follow in two months, Nio said.
China's electric car market slumped 54% in January, the seventh straight month of falling sales. China has reduced subsidies for electric vehicles, hitting demand.
Shares of Nio jumped 13.4% to close at 4.40 in Tuesday's stock market trading. Nio stock also surged earlier in January on a report of a new funding deal after it warned on its cash position in 2020.
The relative strength line for Nio stock is lackluster.
"We think the news puts speculation around Nio's funding issues to bed — at least in the foreseeable future," said Robin Zhu, an analyst at Sanford C. Bernstein, who called the deal a government bailout. Zhu upgraded Nio stock to the equivalent of a hold.
But Zhu remains concerned about Tesla competition and Nio's fundamental outlook, according to Bloomberg. Tesla began making electric cars for the Chinese market in China this year.
Tesla stock fell 4% Tuesday.
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