Tesla Buys $31M of Factory Equipment from Rival Nio in Surprise Move

It’s not often that you hear about companies in competition with one another selling their equipment to the other.

This was surprisingly the case with China’s electric vehicle giant Nio Limited (NYSE: NIO) when it sold about $31 million worth of its factory equipment to U.S. electric giant Tesla Inc. (NASDAQ: TSLA).

Wall Street learned of the sale this week in a report from cnEVpost.

Apparently the Chinese electric vehicle maker had to make the sale of stamping line equipment when it was going through its toughest time in 2019.

According to the cnEVpost, Nio had sold the equipment, which the company ironically previously ordered from Tesla, in order to maintain its capital chain that year.

The report details that Nio had paid half the price as a down payment but was unable to take delivery of the equipment when it arrived at the customs as the company was short on money. It then sold it to Tesla.

The money from Tesla was able to help the company overcome the rough time it was experiencing. At the time Nio also restructured its workforce and let go of over 3,000 employees, including 30% of its managers.

2019 was one of the worst trading years for the company as its stock fell to as low as $1.19. They then rebounded in 2020 to rise to as high as $67.

Chinese electric vehicle maker Xpeng Inc.’s (NYSE: XPEV) CEO He Xiaopeng had reportedly bought shares in Nio in 2019. At the time the CEO said he had backed Nio because the failure of companies like Xpeng and Nio would create a big problem for the group of electric car companies in China.

It was in January of this year that Nio unveiled its first-ever sedan, the ET7.
Shares of NIO have been down nearly 25% in the past month.

The company reported mixed set of Q4 2020 results this week revealing that Nio’s loss per American Depositary Share was wider than expected at about -$0.14. Revenues came in slightly ahead of expectations growing 46.7% sequentially to about $1.02 billion however.

Looking ahead, Nio expects to deliver between 20,000 and 20,500 vehicles in Q1 2021, marking an increase of about 17% at the midpoint from Q4 2020.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.