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Nio Sold $31M Factory Equipment To Tesla To Get Through A Difficult Time

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Nio Limited’s (NYSE: NIO) sale of RMB 200 million (about $31 million) worth of factory equipment to rival Tesla Inc. (NASDAQ: TSLA) helped the Chinese electric vehicle maker to get through its toughest time in 2019, cnEVpost reported Wednesday.

What Happened: Nio sold the stamping line equipment that it had previously ordered to Tesla in order to maintain its capital chain during the most difficult period, the report quoted Nio’s CEO William Li as saying in a recent interview with Chinese media.

See also: How to Invest in Tesla Stock

Nio had reportedly paid half the price as a down payment but was unable to take delivery of the equipment when it arrived at the customs and sold it to Tesla. Nio’s sale of the equipment to Tesla saved the Elon Musk-led automaker at least six or seven months as it had not even pre-ordered the equipment at that time.

The money received from Tesla was a sort of mutual help as it enabled Nio to tide through the crisis, Li reportedly said.

At that time, Nio also restructured its workforce by firing more than 3,000 employees, including 30% of its managers, as per the report.

See Also: Nio, Xpeng, Li Auto Hire Investment Advisors For Hong Kong IPO: Report

Why It Matters: Shares of Nio had fallen to as low as $1.19 in 2019, the worst year for the company, but rebounded in 2020 and rose to as high as about $67.

It was reported earlier this month that Chinese electric vehicle maker Xpeng Inc.’s (NYSE: XPEV) CEO He Xiaopeng bought shares in Nio during the latter’s toughest time in 2019. Xiaopeng reportedly said he backed Nio because the failure of companies like Xpeng and Nio would create a big problem for the group of electric car companies in China.

Nio unveiled its first-ever sedan, named ET7, at the Nio Day event held in January this year. The company is taking aim at high-end competitors with the technology, performance and user experience features it announced.

Price Action: Nio shares closed almost 10.3% lower on Wednesday at $36.96, while Tesla shares closed 4.8% lower at $630.27.

Read Next: Tesla Hikes Model Y Prices In China

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