NIO Inc. NIO is reportedly strategizing to spin off its battery manufacturing division, aiming to achieve profitability through cost reduction and enhanced efficiency.
The emerging battery division, which is guided by experienced engineers who worked in Apple Inc. AAPL and Panasonic Holdings Corporation PCRFF, is planning to attract external investors following its proposed spin-off, potentially occurring by the end of this year, according to a news report by Reuters.
The valuation of this unit will be determined at a later stage, the report added.
The assets earmarked for the spin-off are expected to encompass the proposed factory, select testing equipment, and various intellectual property rights, the Reuters report read.
This planned facility is designed to have an annual production capacity of 40 gigawatt hours (GWh) of batteries, sufficient to supply around 400,000 long-range electric vehicles, it added.
NIO stock hasn't done too well so far this year. The stock was down more than 40% over the past year.
The decision to spin off its battery unit highlights Nio's accelerated push towards profitability.
Previously, the company intended to partially produce batteries in-house while outsourcing the rest, similar to Tesla, Inc.'s TSLA approach, the report read, citing an insider.
According to the plan, the top engineers from Nio's battery unit, many of whom have experience in quality and supplier management from Tesla's Nevada battery factory, will transition to the new company.
Concurrently, some staff members from the unit will be integrated into different departments within Nio.
Yesterday, the company's third-quarter numbers smashed Wall Street expectations.
Nio recorded 55,432 electric vehicle deliveries in the third quarter of 2023, up by 75.4% Y/Y and 135.7% Q/Q.
The company also agreed to acquire manufacturing equipment and assets from Anhui Jianghuai Automobile Group Corp., Ltd., a prominent state-owned automobile manufacturer in China and NIO's partner in producing all its current vehicle models.
Price Action: NIO shares are trading higher by 2.15% to $7.59 premarket on the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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