Cash-strapped electric vehicle maker Nio has raised $100 million in convertible bonds, relieving immediate cash flow concerns, but now faces delivery delays for its February shipment amid a viral outbreak that has brought much of the country to a standstill.

Why it matters: The cash infusion may temporarily alleviate financial pressures for the troubled EV maker, which had just RMB 2.55 billion ($357.3 million) in cash and equivalents as of the third quarter of last year.

  • However, given the company’s difficulty raising financing, there has been growing concern among investors about whether it will be able to pay for its ambitious growth plans in its competition with Tesla.
  • The new cash it raised was inadequate in tackling the challenges from the virus let alone launch its EC6 SUV, Nio’s challenge to Tesla’s Model Y, Tu Le, managing director of Sino Auto Insights consultancy, said when contacted by TechNode on Friday.
  • Whether the company can make “any significant gains” in the first half of this year could be a concern, when all automakers are doing their best to just hold on and Nio is no exception, Le added.
  • Nio’s shares plunged 7% to $4.08 on Thursday.

Details: Nio is selling around $100 million worth of convertible bonds, which mature in 360 days with zero interest, to two “unaffiliated” Asian-based investment funds, according to an announcement released Wednesday.

  • Shanghai-based Nio said it will issue $70 million in convertible notes to one of the two unnamed funds through a private placement and expects to close the deal on or around Feb.10.
  • The notes will be convertible into company shares at $3.07 per American Depositary Share (ADS), around 70% of the current market price, six months from the issue date. It completed the sale for the balance to the another fund on similar terms in January.
  • Nio reiterated that it is currently working on several other financing projects, though the outcomes remain uncertain. In a notice sent to Chinese media, the EV maker said it is currently focusing on the funding programs with “strategic value” to business growth.
  • Nio has delayed deliveries of its electric crossover ES6 initially scheduled for delivery in February, according to two customers TechNode spoke with on Thursday who asked to remain anonymous.
  • Both customers said that the company salespersons did not give a timeframe for the ES6, that production has resumed but there were staff shortages due to the outbreak. The two customers placed orders about a month ago, and now expect that the delivery will be rescheduled to April.
  • Nio will minimize the impact of the virus with suppliers and catch up during February deliveries as operations resumed fully on Feb. 10, the company told TechNode late Friday.

Tesla says deliveries of China-made Model 3 will be delayed

Context: This is Nio’s third convertible bond offering after going public in the US in August 2018.

  • It raised $650 million by selling a five-year convertible note to investors including Tencent and Hillhouse Capital Management last January, Reuters reported.
  • This was followed by a financing program totaling $200 million from main backer Tencent and Nio founder William Li Bin nine months later.
  • Last month, the company confirmed that it is in talks with Chinese automaker GAC regarding an investment of up to $150 million.

Update: added comments from Tu Le and the company.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

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