EV Maker Nio's Shares Rise on Talk of Battery-Unit Spinoff

Key Takeaways

• Chinese electric vehicle (EV) maker Nio Inc. plans to spin off its battery manufacturing unit within a matter of weeks, Reuters reported Wednesday.
• The move could shorten Nio's timeline to profitability as the EV maker struggles to reassure investors.
• The news comes just one day after Nio reported third-quarter earnings showing a significant improvement from the company's previous-quarter earnings report.

Nio Inc. (NIO) stock rose about 6% by late afternoon Wednesday after Reuters reported that the Chinese electric vehicle (EV) company was considering spinning off its battery manufacturing unit.

The battery-unit spin-off could happen within a matter of weeks, according to two sources with knowledge of the matter, Reuters reported. The move would mark a shift in Nio's business strategy and may shorten the company's timeline to profitability. The new battery manufacturing unit would be staffed by the division's top engineers, as other employees in Nio's current battery department are reassigned to other teams, Reuters said.

On Tuesday's earnings call, Chief Executive Officer (CEO) William Li said Nio would continue with battery research & development but begin outsourcing battery manufacturing, although he didn't offer specifics.

News of the spinoff came a day after the unprofitable automaker reported solid third-quarter earnings, including significantly increased vehicle delivery numbers and shrinking losses. More than 55,000 vehicle deliveries in the third quarter mark more than a doubling from the previous quarter's deliveries and a 75.4% increase year-over-year.

Gross profit in the third quarter was down 12.2% from the same period a year ago, but swelled 1,650.9% compared with the second quarter of 2023. Nio's share price took a dive following its previous-quarter earnings call in August and the company subsequently offered nearly $1 billion in convertible bonds to raise money.

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