Registered capital for electric vehicle maker Nio swelled to RMB 3.85 billion (around $540 million) from a mere RMB 11 million on Tuesday, as it readies for a long-awaited bailout worth RMB 7 billion from several state-owned investors.

Why it matters: Just a few months ago, Nio was cutting costs to stretch its cash reserves. Now with this capital injection, the EV maker is poised for growth—monthly production capacity will surge 25% from current output to 5,000 vehicles in September.

  • Shares have been climbing for five consecutive days, gaining 6.6% on Thursday to close at $5.97, a 400% rebound from the lowest point of $1.19 in October.

Details: Nio on Tuesday increased registered capital for Nio (Anhui) Holding Ltd. to around RMB 3.85 billion from RMB 11 million, according to Chinese business research platform Tianyancha.com. It also made a series of moves to restructure its network of legal entities.

  • In April, in preparation to receive funds from its bailout by the Hefei government, the company began forming its new China entity. It renamed a former sales subsidiary as Nio (Anhui) Holding Ltd., a wholly foreign-owned enterprise.
  • Nio is currently restructuring its businesses in China in accordance with the investment agreement, transferring its core businesses and assets to Nio China, a company spokesperson told TechNode on Friday.
  • These include vehicle research and development, supply chain, sales and services, and recharging service Nio Power, the company said.
  • However, the external financing from the government investors is not reflected in the capital injection of the new China entity, the company confirmed Friday evening to TechNode.
  • Cayman Island-registered Nio Inc. indirectly controls its business operations in China through the three Hong Kong subsidiaries which will own a combined 75.9% stakes of Nio (Anhui) Holding Ltd. after the deal is closed, while three Chinese state-owned investment firms will hold the remaining 24.1%, according to the company. Nio’s three Hong Kong-registered limited companies are currently the only three shareholders, data from Tianyancha.com showed.
  • Nio founder and CEO William Li said during a call with analysts late last month that the transaction is currently still in progress, and that the company is “fully confident” to close the deal “before the end of June.”
  • Nio (Anhui) Holding Ltd. now has control over 32 of Nio’s enterprises in China, according to Tianyancha.com.

Context: In a final agreement reached by the company and a group of state-owned investment firms in late April, investors will inject a total of RMB 7 billion in cash into Nio (Anhui) Holding Ltd., Nio China’s legal entity, for a 24.1% stake. 

  • Meanwhile, Nio will invest RMB 4.26 billion in the new entity, alongside the injection of its business assets valued at RMB 17.77 billion, for the rest of the shares. The investment will be made in five installments over a year or so, with the first installment of a combined RMB 4.8 billion due within five working days of the deal closure.
  • The EV company is on track to deliver its third electric SUV model in September. The EC6 is a sport coupe with a range of 615 kilometers (382 miles) per charge.

Bottom line: This may be the struggling EV maker’s turning point.

  • On Thursday, the company reported record-breaking deliveries of 3,436 vehicles in May, more than three times the deliveries in the same month last year, and the highest ever since the company began delivering cars in mid-2018.

Updated: includes clarification in the Context section that Nio’s contribution will include a RMB 4.26 billion investment along with RMB 17.77 billion in assets into the new China entity. Added points four through six in the Details section to include additional commentary from the company after publication. Updated headline.

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