TLDR
- NIO raised $1 billion through share sale of 181.8 million shares at $5.57 per ADS and HK$43.36 per Hong Kong share
- Stock dropped 8.9% to $5.72 following the announcement due to dilution concerns
- Funds will go toward R&D, future vehicle platforms, battery swapping network expansion, and general corporate purposes
- This marks NIO’s second major fundraising round in 2025 after raising HK$4 billion in March
- Company aims to cut R&D spending by 25% to reach break-even target by Q4 2025
NIO Inc completed a $1 billion equity offering on Thursday, selling approximately 181.8 million new shares to fund its expansion plans. The Chinese electric vehicle maker priced its American depositary shares at $5.57 each and Hong Kong ordinary shares at HK$43.36.
The market reaction was swift and negative. NIO’s US-traded shares tumbled 8.9% to close at $5.72 on Wednesday following the announcement.
Investors appeared concerned about potential dilution from the large share issuance. The stock had been on a strong run, climbing more than 40% since mid-August before this week’s drop.
The timing of the offering suggests NIO wanted to capitalize on its recent stock rally. The Shanghai-based company has struggled with profitability since its founding in 2014.
NIO plans to use the proceeds across several key areas. The company will invest in research and development of smart electric vehicle technologies and develop future technology platforms.
Expanding Infrastructure and Operations
Part of the funds will go toward expanding NIO’s signature battery swapping network. The company’s battery swap model allows drivers to replace depleted batteries with fully charged ones in minutes.
However, this technology requires expensive infrastructure investments. NIO must build and maintain battery swap stations across its markets.
The company also plans to strengthen its balance sheet with the new capital. This comes as NIO faces ongoing challenges in China’s competitive EV market.
Chinese automakers are locked in a prolonged price war while dealing with overcapacity issues. These market conditions have pressured margins across the industry.
Second Major Fundraising This Year
This marks NIO’s second large fundraising round in 2025. The company previously raised HK$4 billion in March through another share offering.
The repeated need for external funding highlights NIO’s cash burn as it scales operations. Bloomberg Intelligence analyst Joanna Chen noted the offering could support NIO’s cash position.
Chen wrote that the funds could help support production ramp-up of the L90 and ES8 SUVs in the fourth quarter. The analyst also mentioned plans for three new model launches in 2026.
Setting new standards is what iteration is all about. The all-new NIO ES8 is now available for test drives nationwide. It sets new standards in terms of driving and the experience of travelling in a large three-row SUV. pic.twitter.com/anwYNATczS
— NIO (@SZABOBENOIT) September 10, 2025
NIO has been working to control costs while pursuing growth. The company announced in June it aims to reduce research and development spending by up to 25%.
This cost-cutting initiative is part of NIO’s goal to reach break-even by the fourth quarter of 2025. The company has never posted an annual profit since going public.
Market Performance and Underwriters
NIO’s Hong Kong-listed shares showed more resilience than the US listing. The Hong Kong shares initially dropped as much as 4.2% but recovered to trade up 1.3% on Thursday.
Morgan Stanley, UBS Group, and Deutsche Bank arranged the latest offering. NIO also granted underwriters a 30-day option to purchase up to 27.27 million additional ADSs.
The company expects to close the ADS offering on September 11 and the Hong Kong ordinary shares offering on September 17, 2025.
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