The growing Chinese market for electric cars received a $1 billion boost when the local startup closed a round headed by existing investor Tencent Holdings Ltd, as well as U.S. hedge fund Lone Pine Capital, Chinese investment firm CITIC Capital, and Scottish fund manager Baillie Gifford. The round put the company’s valuation at $5 billion.
Nio, formerly known as NextEV, set itself apart from a crowded field of electric vehicles by launching a production car, while most their competitors have only presented prototypes. The investment meets a market taking shape, as Chinese authorities have published new rules that require automakers to put alternative fuel options in for the consumers if they want permission to sell internal combustion cars. Beijing wants to see that one out of every five cars sold in China run on alternative fuels by 2025.
Last year, 207,000 electric cars were sold in China, while 237,000 were sold in the rest of the world. By the end of this year, LMC Automotive forecasts that 295,000 electric cars will have been sold in China. The country is currently the second biggest market for Tesla, and it is the largest market for General Motors cars.
Nio has also pledged to bring autonomous electric cars to the U.S. by 2020, a promise based on a joint venture with China’s fourth-largest automaker Chongqing Changan Automobile. Earlier this year, the New York Times reported that manufacturers like G.M. and Volkswagen were moving the research, development, and production of electric cars to China, to comply with demands from Beijing to share technology with local companies.
In March, Nio raised $600 million in a funding round. Now, they can continue plans to bring their first mass production car, the ES8 pure-electric, a seven-seat sport utility vehicle, in December.