Chinese electric car startup Nio Inc is expected to get strategic investment of over 10 billion yuan ($1.43 billion) from the Hefei city government in Anhui province, according to a framework agreement the two signed on Tuesday.
William Li, founder and chairman of Nio, told China Daily that he expected the two sides to work out details and finalize the deal within two months.
The investment will help ease the startup's financial pressure. Nio said in late December that it didn't have enough money to continue operating another 12 months without additional funding.
It has raised $200 million through convertible notes this year ahead of the deal with Hefei.
"It is good timing for Hefei to invest in us. We are like a rocket that has taken off and needs some more fuel," said Li.
As part of the deal, Nio will establish in Hefei a company in charge of its China operations, including production, research and development and sales. Nio will remain headquartered in Shanghai.
Li said Hefei is a reasonable choice. "Over the past few years we have a better understanding of its business environment and, in fact, I think its competitive edge as a city has been underestimated," he said.
Nio has built a plant in Hefei with JAC Motors which is producing Nio's ES8 and ES6 SUVs. It will also produce the third model, the EC6. The model will be a rival of Tesla's Model X and hit the market in the second half of the year.
Li said there are around 200 colleagues in Hefei, and after the deal the number of people working there will continue to grow. But he added that current facilities in other cities will not be affected.
Nio delivered 1,598 vehicles in January 2020, down 11.5 percent year-on-year, due to the Spring Festival and the ongoing novel coronavirus epidemic.
The startup said it expected production and sales to be affected in February as well.
But Li said he is confident in the whole year performance because Nio has long been promoting its vehicles and developing customers online. Its total sales by the end of January stood at 33,511.