EV Maker Nio Shifts Into High Gear on China Local-Government Pact

Nio shares leaped after the Chinese electric-vehicle maker disclosed an agreement with the government of Hefei, China.
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Nio (NIO) - Get Report shares leaped after the Chinese electric-vehicle maker said it reached a preliminary collaboration agreement with the government of Hefei, China, to set up its headquarters in the city.

Hefei is the capital and largest city of the Chinese province of Anhui and the site of Nio's main manufacturing hub. Anhui is about a five-hour drive west of Shanghai.

Under the agreement, Nio said in a statement, the "Hefei government expects to provide resources and funding support for the long-term growth of Nio in [Hefei. Nio] plans to establish Nio China headquarters, further expand its operations and deepen its relationship with local ecosystem partners in Hefei."

A Hefei government announcement said the city expects the investment to exceed 10 billion yuan, or about $1.4 billion.

Bernstein analyst Robin Zhu upgraded Nio to market perform from underperform with a $4 price target.

Last month, a report from China said that the Shanghai company was set to receive $1 billion of funds from state-owned auto maker GAC Group, which will cover its 2020 cash-flow needs.

Nio has been under pressure from Tesla (TSLA) - Get Report, which began producing electric cars in China last year.

In December, Nio reported a third-quarter loss of 2.52 billion yuan ($352.8 million), or 2.48 yuan a share, narrowed from a loss of 2.81 billion yuan, or 42.59, in the year-earlier quarter. The latest adjusted loss came to 2.38 yuan (US$0.33) a share.

Revenue totaled 1.84 billion yuan ($257 million), up 25% from a year earlier.

Analysts were expecting Nio to report a loss of 2.53 yuan a share on revenue of 1.7 billion.

Vehicle sales were 1.73 billion yuan (US$242.5 million) up 22% from a year ago. 

The company delivered 4,799 vehicles in the third quarter, including 4,196 ES6s and 603 ES8s, compared with 3,553 delivered in the second quarter.

At last check Nio American depositary receipts were up 20% at $4.65. They earlier on Tuesday traded up as much as 34%.