Nio Inc. saw its shares surge nearly 16% on Monday, marking its biggest jump in almost five months, following the announcement of a 13.3 billion yuan ($1.9 billion) cash injection from existing shareholders. This capital boost, aimed at reinforcing its China unit, comes from both Nio's own funds and strategic investors. The group of investors includes Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., and CS Capital Co., who have collectively agreed to invest 3.3 billion yuan in cash for newly issued shares of Nio China. Additionally, Nio will directly invest another 10 billion yuan, reducing its ownership in the unit from 92.1% to 88.3%.

Morgan Stanley noted that this fresh funding could ease concerns about Nio's cash flow and bolster its balance sheet in the short term. Despite significant competition and challenges in the Chinese EV sector, Nio continues to pursue an advantage through its investment in charging infrastructure and battery-swapping technology. The company has struggled to achieve profitability, reporting a 4.5 billion yuan loss in Q2, though it exceeded expectations with 17.5 billion yuan in quarterly sales. The funding will be completed in two installments by year-end, and Nio retains the option to invest an additional 20 billion yuan in Nio China by the end of 2025.