Nio's Riskiest Asset Is Valued at $2.4 Billion, But Its Potential Just Skyrocketed
Some investors are uncertain of the future Nio's battery swapping network has.
Overview
Nio's (NYSE: NIO) battery swap network has always been intriguing and a bit controversial to investors. If people see value in the speed of swapping batteries and using battery-as-a-service, a built-out network would be a huge competitive advantage and would unlock a higher-margin business. However, if they find it just as fast and simple to charge vehicles at a fast-charging network, Nio's battery swapping stations could turn into a big waste of time, effort, and, of course, capital.
All that said, the game just completely changed with the announcement that Geely is "buying" into Nio's battery swap network. Here are the details, and what investors have to know.
Details
Nio recently announced that a Geely Holding subsidiary, assuming regulatory approval, will soon hold a 30% stake in NIO Power, Nio's subsidiary that runs its battery swapping network. While the deal values NIO Power at roughly $2.4 billion, Geely is mostly avoiding cash outflows. Instead, it's contributing its own commercial battery swap business (Yiyi Internet Technology) and about $94 million for the 30% stake in NIO Power. In a second transaction, Nio is purchasing a 10% stake in Haohan Energy, which is Geely's charging business.
Source
Originally published at www.fool.com.