Why Nio Stock Popped Today

Nio will deal with a stake in Geely’s Lotus.

What took characteristic

Shares of Chinese language electrical vehicle producer Nio (NYSE:NIO) stock hopped 2.6% increased as of 12: 45 p.m. EDT Tuesday after Bloomberg reported that Nio merchants can also possess a second manner to salvage prosperous.

Because now they’ll possess a part of Lotus Vehicles.

Lotus Evora GT Sports Car.

Image provide: Lotus Vehicles.

So what

As Bloomberg advises, Lotus, the iconic British sports vehicle maker that is majority-owned by China’s Zhejiang Geely Preserving Team, is raising $2.3 billion that it will expend “to remodel [itself] into an all-electrical sign.” Nio would possibly per chance well well well now not make contributions all of the $2.3 billion, but it with out a doubt will make contributions a part of it — and salvage a part of Lotus in return.  

As neatly as, Lotus’ electrical vehicle division, Lotus Technology, and Nio “will explore collaboration in areas at the side of excessive-cease lustrous EVs.”

Now what

That can well well well change into famous as Geely contemplates taking Lotus public — per chance as soon as subsequent yr.

On the one hand, Lotus is planning to launch promoting a brand current electrical Form 132 SUV in 2022, to be followed briefly say by a four-door coupe in 2023, a second SUV in 2025, and an electrical Form 135 sports vehicle in 2026. If all or any of those autos are per technology developed by Nio, the latter would possibly per chance well well well stand to reap beaucoup bucks in the originate of excessive-margin technology licensing earnings from Lotus.

Additionally, if Lotus debuts as the $15 billion-plus preliminary public offering that is being contemplated, then reckoning on how colossal a part of Lotus that Nio will receive for its funding, Nio would possibly per chance well well well reap hundreds of thousands, or even billions, extra in designate from its equity pastime in Lotus.

In short, there are all types of causes for Nio merchants to be smiling on the present time.

This article represents the concept of the creator, who also can disagree with the “legitimate” advice characteristic of a Motley Fool top class advisory carrier. We’re motley! Questioning an investing thesis — even certainly one of our possess — helps us all think seriously about investing and originate choices that relief us change into smarter, happier, and richer.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.”>

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