JAC teams up with NIO Holding for new EV venture

It is worth noting that the joint venture with Jianghuai Automobile is NIO Holding, which is not the same as the well-known NIO Inc.

Jianghuai Automobile (JAC) signed a letter of intent for a joint venture with NIO Holding (NIO Holding). The name of the joint venture company is proposed to be Jianglai Advanced Manufacturing Technology (Anhui).

It is worth noting that the joint venture with Jianghuai Automobile is NIO Holding, which is not the same as the well-known NIO Inc.

On April 29, 2020, NIO and Hefei City signed a 7-billion strategic investment agreement and jointly established Nio Holding. Hefei City (including Hefei Construction Investment and Holding, SDIC Investment, Anhui Hi-tech Venture Capital) invested 7 billion yuan in NIO Holding, and NIO Inc will invest RMB4.26 billion in NIO Holding.

After the transaction, NIO Inc held 75.9% of the controlling shares of NIO Holding, and strategic investors held a total of 24.1% of the shares.

NIO Inc will inject core assets including vehicle research and development, supply chain and manufacturing, and energy services into the entity NIO Holding. Now NIO Inc, listed on the NYSE, is a subsidiary of NIO Holding.

Previously, it was NIO Inc that had an OEM agreement with Jianghuai Automobile. Now Jianghuai Automobile has established a joint venture with NIO Holding, the parent company of NIO Inc, with the purpose of promoting further cooperation between Jianghuai Automobile and NIO Inc.

When Hefei City strategically invested in NIO, the two parties also signed a Valuation Adjustment Mechanism (”VAM”) agreement. It requires that NIO Inc needs to repurchase shares from strategic investors under the following circumstances:

  1. After NIO Holding receives all the investment from the strategic investors in the first phase, if it fails to submit an IPO application within four years, it will complete the listing within five years; or
  2. NIO failed to inject assets into NIO Holding within one year after the entire investment in the first phase was injected; or
  3. After NIO Holding received all the investment in the first phase, the vehicle delivery volume was less than 20,000 for two consecutive years.

Regarding the joint venture established by Jianghuai Automobile and NIO Holding, Jianghuai Automobile plans to subscribe RMB 255 million, which will be paid in cash in RMB, accounting for 51% of the total registered capital. NIO Inc plans to subscribe RMB 245 million. It is paid in cash in RMB, accounting for 49% of the total registered capital.

JAC believes that the establishment of the joint venture is to further deepen cooperation in the new energy vehicle manufacturing between the two parties. At present, the joint venture is still in the planning stage and will not affect JAC’s operating results.

Disclaimer: This is an article created by Michael Liang for Chinasdg.org. You can find the original article here: https://chinasdg.org/2021/03/05/jac-teams-up-with-nio-holding-for-new-ev-venture/.

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