Guangzhou Automobile in talks to invest in troubled NIO

Guangzhou Automobile Group confirmed it is in talks with NIO Inc about an investment in the cash-strapped Chinese electric-vehicle maker. GAC, its units and external parties could invest US$150 million in NIO, the automaker said in a statement to the Shanghai stock exchange today, Bloomberg reports.

An agreement has not been reached, the company said, echoing a NIO statement that said the two have explored financial and strategic opportunities.

NIO has been hit by weakness in China’s overall auto market, cost overruns and recalls. The Shanghai-based company said late last year it was making significant progress toward raising more funds, but it also warned it didn’t have enough money to carry on operating for another 12 months.

The automaker’s Chief Financial Officer Feng Wei said on December 30 that a US$200 million convertible-bond sale NIO announced in September was almost complete. It received US$100 million from backer Tencent Holdings and was processing a purchase by Chief Executive William Li.

GAC and NIO have an EV joint venture that was established in 2018.