Stock Market

NIO Stock: Nio Power Unit Secures First External Investment

Source: Piotr Swat / Shutterstock.com

Among the global EV stocks that continue to see strong interest from this year’s lows is Chinese electric vehicle (EV) maker Nio (NYSE:NIO). Shares of NIO stock are once again on the move higher today, moving about 0.5% in early after-hours trading. NIO stock had peaked 2% earlier in the afternoon before dipping somewhat as the market closed.

This move comes as the company announced the first-ever external investment for its power unit. According to a press release forwarded by the company, Nio Power will receive $207 million as a strategic investment from the Wuhan Guangchuang Emerging Technology Venture Capital Fund Phase 1 (better known as the Wuhan Guangchuang Fund). This fund is backed by the Wuhan provincial government. This deal is aimed at providing Nio Power with the funds it needs to advance its research and development. And improve the firm’s charging and battery-swapping technology.

Let’s dive more into what was announced and what investors should make of this deal.

NIO Stock Rises on Key Strategic Investment

The Chinese government has clearly begun stepping more actively into its stock market, looking to support home-grown companies. For Nio, that’s a great thing, considering the amount of pain regulators have caused in recent years following the government’s crackdown on the tech sector specifically.

The government has clear incentives to promote battery-swapping technology, energy storage, and charging infrastructure as the world’s second-largest economy looks to go green fast. China’s EV and electrification push has been impressive, and this is yet another step in the right direction.

For Nio, this strategic investment is a big deal. Private investors may look at this funding round and reconsider their preconceived notions about geopolitical risk with this stock. If that’s the case, and more foreign money flows into this Chinese name, it could mean more upside on the horizon. That’s why I think NIO stock is up so much today on the news, while other Chinese counterparts have lagged.

On the date of publication, Chris MacDonald 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 writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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