Chinese automaker Guangzhou Automobile Group Co Ltd said on Thursday it was in early talks with Tesla challenger Nio Inc about a financing proposal, but any potential investment would not exceed $150 million (115.01 million pounds).
The U.S.-listed electric car startup, which last month flagged an urgent need for more funding, said on Wednesday it was exploring financing and strategic opportunities with Guangzhou Automobile (GAC Group).
Nio did not specify the size of the potential funding but earlier in the day Sina Finance and other media reported it was in talks for up to $1 billion, sending its shares up as much as 17% in heavy trade.
GAC Group said in a statement that the potential financing of up to $150 million would include funds it would raise itself and not have a material impact on its own finances.
It also said that there is “still great uncertainty as to whether an agreement can be reached.” Shares in GAC Group fell more than 1% in morning trade.
Nio declined to comment on GAC’s statement.
Nio on Dec. 30 warned in its quarterly report that the company did not have adequate cash for continuous operation in the next 12 months and it was looking for external financing.
Electric-car makers are battling uncertain demand in the world’s largest car market as the government rolls back subsidies amid criticism that some firms have become overly reliant on government funding.
Sales of new energy vehicles, once a bright spot in the market, fell 4% last year and officials from the country’s top auto association said on Monday that they expect 2020 sales to stay at a similar level or slightly increase.
Nio said on Wednesday the New York Stock Exchange had contacted it after the unusual market activity in its American Depositary Shares.
The firm has about lost a third of its value since its 2018 listing and currently has a market capitalization of $4.52 billion.
GAC Group operates in nearly 18 markets worldwide and sold over 2.1 million cars in 2018, including those made in partnerships with automakers Honda Motor Co Ltd and Toyota Motor Corp.
The Guangzhou-based automaker has been looking to enter the U.S. market since 2017, but put off its plans indefinitely in May last year amid trade tensions between Washington and Beijing.
(Content and photos syndicated via Reuters)
