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Among the global EV stocks that continue to attract strong interest from this year’s lows are Chinese electric vehicle (EV) makers. Nio (New York Stock Exchange:NioNIO shares continued to trend higher today, rising about 0.5% in early after-hours trading. NIO shares peaked at 2% in early afternoon trading but fell slightly after the market closed.
The move comes as the company announced its first outside investment in its power generation division. According to a press release forwarded by the company, Nio Power will receive $207 million in strategic investment. Wuhan Optics Emerging Technology Venture Capital Fund Phase 1 (better known as the Wuhan Optics Fund). The fund is backed by the Wuhan provincial government. The deal is intended to provide Nio Power with the capital it needs to advance research and development, and improve the company’s charging and battery swapping technologies.
Let’s take a closer look at what was announced and how investors should value the deal.
NIO shares rise on key strategic investment
The Chinese government has apparently begun to intervene more aggressively in the stock market to support Chinese companies, which is great for NIO given the pain regulators have endured in recent years as the government cracked down on the tech industry.
As the world’s second-largest economy rapidly transforms into a green society, the government has a clear incentive to promote battery swapping technology, energy storage and charging infrastructure. China’s push into EVs and electrification has been impressive, and this is another step in the right direction.
For Nio, this strategic investment is a big deal. Retail investors may look at this funding round and reconsider their preconceptions about the geopolitical risk of this stock. If so, more foreign funds flowing into this Chinese company could lead to further upside in the future. I think that’s why NIO’s stock price has risen significantly today on this news, while other Chinese companies are lagging behind.
As of the date of publication, Chris McDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author in accordance with InvestorPlace.com’s Publishing Guidelines.
