Chinese electric car manufacturer Nio Inc (NYSE:NIO) had been in all sorts of trouble over the past months, and there have been widespread fears that the company was going to run out of cash. However, it seems that the situation is going to change soon, and the company is going to be out of the woods soon.
The company’s shares soared by as much as 15% to $4.46 this morning after NIO announced that it is currently in discussion over fresh infusion of funds. The funding is also going to help the company in financing its factories as well, and hence, the rally in the NIO stock has not come as a surprise.
The company announced that currently, it is in talks with the Heifei government with regards to funding. The city, which is the capital of the province of Anhiu, is one of the most important locations for car manufacturers.
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At this point in time, the two parties are in the process of thrashing out the specific terms for fresh funding to the tune of $1.4 billion. It has also been reported that NIO could also build a new China headquarter at Heifei. In addition to that, research and development facilities and manufacturing hubs are also expected to be established in the city.
It goes without saying that if it materializes, then it is going to be a major boost for NIO, which has struggled for cash over the course of the past months. The company’s stock price had tanked as well. However, with the infusion of cash, it could renew its quest to take on Tesla. In this regard, it should be noted the NIO has a lot of competition from another electric vehicle manufacturer in China.
NIO had enjoyed a meteoric rise in China, primarily due to the subsidies that had been put in place by the Chinese government. However, once those subsidies were reduced, it struggled to keep its head above water. Sign-up below for continuing coverage on shares of $NIO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!