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Report Suggests China Has Halted Deal Talks With Nio: 'Risks Assessed Too Big'

Shanthi Rexaline

Nio Inc – ADR (NYSE: NIO) shares are falling Wednesday morning after a report suggested a speculated investment in a local province may not materialize.

A Tuesday report in the National Business Daily suggested Nio was in talks to strike a 5-billion yuan (or $707 million) investment in the Wuxing District of Huzhou City in east China that also includes the setting up of a factory with an estimated annual capacity of 200,000 units.

However, the district government has stalled discussions with the Chinese EV maker, NBD reported Wednesday, citing confirmation by the information office of the Wuxing District to Chinastarmarket.com.

Following negotiations on the potential investment, no firm agreement was signed. The breakdown of the discussions was due to the local government's view that the "risks assessed are too big."

Although the third-quarter delivery numbers give a ray of hope that things may turn around, Nio's precarious cash position along with the macro challenges the carmaker is facing makes the shares a risky bet for investors.

Nio shares were slipping 5% to $1.47 at time of publication.

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Photo courtesy of Nio.

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