Nio (NIO) - Get Report, the Shanghai electric-vehicle maker, is set to receive $1 billion of funds from state-owned auto maker GAC Group, which will cover its 2020 cash-flow needs, a report from China said.
Sina Finance reported the funding.
Nio has been under pressure from Tesla (TSLA) - Get Report, which began producing electric cars in China last year. The Chinese company reported a third-quarter loss of 2.55 billion yuan ($370 million), according to Morningstar.
China’s government still seems to support growth for the country’s electric-car industry but is no longer putting all its money where its mouth is.
Electric-vehicle sales have fallen sharply since the government in June curbed subsidies for purchasers.
Sales of electric and hybrid cars dropped 28% in July through October from the year-earlier period, according to The Wall Street Journal.
Without subsidies, electric cars remain more expensive than similarly outfitted conventional models. So Chinese consumers apparently don’t like electric vehicles enough to pay up for them.
Taxi and ride-hailing companies and government-related auto buyers seem to account for much of China’s demand for EVs, with some car makers saying those purchasers are responsible for 70% of their EV sales, Bernstein analyst Robin Zhu told The Journal.
Nonetheless, Nio shares have nearly tripled over the past three months, while the Shanghai Composite stock index has gained 4% during that period.
Nio stock at last check stood at $4.22, up 12%.