It is also the ＂Middle East local tyrant＂, throwing 15.70 billion yuan to invest in NIO!

The "local tyrants of the Middle East" made another move, investing tens of billions of yuan in NIO.

On December 18, NIO announced that the company and Abu Dhabi investment institution CYVN Holdings L.L.C (hereinafter referred to as "CYVN Holdings") through its subsidiary CYVN Investments RSC Ltd (hereinafter referred to as "CYVN") signed a new round of share purchase agreement, CYVN will invest a total amount of 2.20 billion US dollars (about RMB 15.70 billion) to subscribe for 294 million newly issued Class A common shares of the company.

Affected by the above news, US stocks rose by more than 10% before the market. Since the beginning of this year, many car companies such as NIO, Zero Run, and Xiaopeng have received large investments from foreign companies. The leading advantage of Chinese companies in the field of new energy vehicles is gradually becoming "real money", forming a "strong magnetic field" to attract foreign investment.

NIO continues to attract Middle Eastern capital

In July, NIO received a $738.50 million strategic equity investment from CYVN. In addition, CYVN purchased $350 million worth of NIO’s Class A common stock from an affiliate of Tencent.

In December, CYVN will invest another $2.20 billion in NIO. NIO said that the December investment transaction is subject to customary closing conditions, and the closing is expected to be completed in the last week of December. Following the completion of the December investment, CYVN will hold 20.1% of the total issued and outstanding shares of NIO.

Bin Li, NIO’s founder, chairperson and chief executive, said: "We are encouraged by CYVN’s vision to accelerate the global transition to a more sustainable future and appreciate CYVN’s recognition of NIO’s unique value. With a strengthened balance sheet, NIO is well positioned to strengthen its brand positioning, enhance its sales and service capabilities, and make long-term investments in core technologies to address the increasingly competitive landscape, while [NIO will] continue to improve its execution efficiency and systematization capabilities."

Jassem Al Zaabi, Chairperson and Managing Director of CYVN Holdings, said: "Our increased investment in NIO is in line with our strategy of continuing to build a world-leading portfolio in mobility. This investment demonstrates our confidence in NIO’s unique positioning and competitiveness in the global smart electric vehicle industry. We are pleased to be a long-term strategic partner of NIO and support its efforts in product innovation, technological breakthroughs and international market expansion."

Foreign capital has repeatedly invested in Chinese automakers

CYVN is based in Abu Dhabi, the capital of the United Arab Emirates, and its partnership with NIO is just one example of "local tycoons in the Middle East" investing in Chinese automakers.

In June, the Saudi Investment Ministry signed an agreement with Chinese electric vehicle manufacturer Human Horizons worth 21 billion Saudi riyals (about 40 billion yuan) to establish a joint venture for the development, manufacturing and sales of automobiles.

In addition to the "local tycoons in the Middle East", old European car companies have also continued to invest in Chinese car companies. On October 26, Stellantis N.V. (hereinafter referred to as "Stellantis Group") and Zero Run Automobile announced that they have officially reached a cooperation. Stellantis Group plans to invest about 1.50 billion euros (about RMB 11.68 billion) to obtain about 20% of Zero Run Automobile.

At the same time, the Stellantis Group and Zero Run Auto will establish a joint venture called Leapmotor International in a ratio of 51% to 49%. The joint venture will have exclusive export and sales business to all other markets around the world except Greater China, and exclusive rights to manufacture Zero Run car products locally. According to Zero Run’s plan, Zero Run’s first global model, C10, will enter the European market by export in the third quarter of 2024.

On July 26, Volkswagen announced plans to invest $700 million (about RMB 5 billion) in XPeng Motors. Volkswagen said that through the capital increase, it will eventually hold a 4.99% stake in XPeng Motors. Chairperson and CEO of Volkswagen China Berred said that the penetration rate of new energy vehicles in the Chinese market has exceeded 30%, and this figure is expected to reach 50% by 2025. Volkswagen Group must quickly seize the huge potential of market growth and meet the expectations of Chinese users for high-quality products.

Overall, Chinese car companies are entering a new stage of "technology for market". Ping An Securities Research Report said that foreign car companies’ investment in new domestic car-making forces is a landmark event in the history of our country’s auto industry. China’s auto industry has evolved from the past "market for technology" to "technology for market". Chinese car companies will also transform from the past technology importer to technology exporter.

"Thirty years of Handong, thirty years of Hexi," Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, said in an interview with reporters. "China’s passenger car market started from scratch. Audi entered China in the last century and built a joint venture with FAW. We are the market for technology. Now, China is in a leading position in the industrial chain technology, vehicle manufacturing, market reputation and price competitiveness of the electric vehicle market, and has international competitiveness."

Chinese cars go overseas

Why are foreign capital optimistic about Chinese new energy vehicle companies? This is mainly due to factors such as the surge in China’s new energy vehicle exports in recent years and the gradual spread of them to other parts of the world.

According to the China Association of Automobile Manufacturers, from January to November this year, our country’s automobile exports 4.412 million, an increase of 58.4% year-on-year. Among them, passenger car exports 3.72 million, an increase of 65.1% year-on-year.

Europe and the Middle East, which are favored by Chinese automakers, are the main regions for China’s new energy vehicle exports. S & P’s global automotive strategy and price team said in the report "Opportunities and Challenges in China’s Automobile Exodus Rush" that Western Europe, the Middle East and ASEAN will become the main positions for Chinese cars to go overseas. Among them, by 2030, Chinese automakers will sell more than 800,000 vehicles in the Western European market, and more than 400,000 vehicles in the Middle East and ASEAN markets.

Ping An Securities Research Report said that it is expected that by 2030 our country’s automobile exports will be superimposed on overseas production of more than 10 million vehicles. In the long run, our country’s automobile exports have broad prospects. However, with the increase of our country’s automobile exports, there will also be risks and challenges in the short term. For example, in order to deal with the threat of China’s local new energy vehicle exports to the European domestic industrial chain, the European Union has officially filed a case in October 2023 to initiate a countervailing investigation against pure electric passenger vehicles originating in China. With the increase in automobile exports, it is a must for most automakers to set up factories overseas or cultivate overseas markets.

The Dongguan Securities Research Report said that looking forward to 2024, with the domestic new energy automobile industry entering a period of rapid growth and the increasingly perfect automobile industry chain, superimposed independent brands are gradually establishing advantages in related fields such as Sandian technology and intelligent driving. Under the influence of multiple positive factors, the overseas influence of independent brands is gradually increasing, and China’s automobile exports will enter a growth cycle. Optimistic about vehicle enterprises with strong export business capabilities.

Editor in charge: Zhu Yumeng Proofreading: Gao Yuan

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