Chinese EV maker NIO has priced its additional American depositary share (ADS) offering at $39 per ADS, 7% below Friday's closing price of $41.98.
The company on Monday announced the pricing of the offering of 68,000,000 American depositary shares (ADSs), each representing one Class A ordinary share, at a price of US$39.00 per ADS.
NIO has granted the underwriters in the offering a 30-day option to purchase up to an additional 10,200,000 ADSs.
In its announcement after the bell on Thursday, NIO said it plans to offer 60 million ADSs and intends to grant the underwriters in the ADS offering a 30-day option to purchase up to an additional 9 million ADSs.
This means NIO sold 68 million ADSs, up from the 60 million initially planned, to raise $2.65 billion. Such offerings are typically priced at a discount to entice investors.
NIO said it plans to use the net proceeds from the ADS offering mainly for (i) research and development of new products and next generations of autonomous driving technologies, (ii) sales and service network expansion and market penetration and (iii) general corporate purposes.
Prior to the move, NIO had raised more than RMB 32.8 billion ($5 billion) in cumulative funding this year.
In a recent interview with Chinese media, NIO explained that it has sufficient funds and resources to ensure the company's operation and development, but from the perspective of safeguarding the company's long-term competitive advantage, it will make the best choice for the company's long-term development according to the changes in the market.
Funds expected to strengthen autonomous driving technology
NIO's additional share offer comes after Tesla, XPeng, and Li Auto.
On December 4, Li Auto announced its intention to issue 47 million ADSs to raise about $1.36 billion; on December 8, Tesla announced that it would offer new shares to raise $5 billion; on December 9, XPeng announced a plan to offer an additional 48 million ADSs to raise $2.16 billion.
Caijing.com.cn quoted NIO as saying that its ADS offering is not directly related to the financing plans of other companies, it just thinks it is a good time to raise funds after evaluating the current capital market situation, investors' recognition, and its development plan.
Nonetheless, the purpose behind NIO's financing is clearly to strengthen its existing strengths and make up for its immediate shortcomings. For NIO, it is especially important to strengthen its shortcomings in autonomous driving technology.
In 2019, NIO cut back a lot on its autonomous driving business unit due to financial constraints and turned to Mobileye for cooperation. This caused the company's self-research strength to lag.
However, as its finances stabilize, high-level autonomous driving self-research is back on the company's agenda.
NIO said it has accelerated the development of its second-generation autonomous driving technology platform, NT2.0, with the goal of making it "an industry-leading, production-ready autonomous driving system.
Going overseas
Besides the need to strengthen its shortcomings in autonomous driving technology, the company is also seen as stepping up its plans to enter overseas markets.
As cnTechPost mentioned over the weekend, Zhang Hui, general manager of NIO Germany, recently met with a Chinese diplomat in the European country and introduced NIO's overseas development plans.
According to an article posted on the Chinese Ministry of Commerce website on Thursday, Wang Weidong, commercial counselor of the Chinese Embassy in Germany, met with Zhang by video on December 9 to exchange views on NIO's current situation and development plans.
Zhang briefed Wang on the recent development of NIO and also introduced NIO's overseas development plan, which was not detailed in the article.
The meeting means that NIO seems to be not far from entering the European market.
On the way to catch up with Tesla, where did NIO, Li Auto and XPeng spend their money?
On July 24 this year, William Li Bin, founder of NIO, said in response to a question about whether the company planned to enter the overseas market, "I should say that we are now close to thinking it through and have started to gradually enter the execution state, which means we are starting to prepare our products and personnel."
These years a lot of Chinese car companies that expand in overseas markets have done well, but not yet into Europe, the United States, they are still in some non-mainstream markets and regions, Li said, adding that "NIO's car positioning is relatively high-end, certainly into the mainstream high-end market, mainly Europe and the United States."
In November this year, Chinese media reported that NIO had made substantial progress in entering overseas markets and had set up an export business team, while internally launching a "Marco Polo Plan" for this purpose.
(Update: An earlier version of this article quoted Bloomberg for the pricing. The latest version used NIO's announcement.)
