(Reuters) - Cash-strapped Chinese electric vehicle (EV) maker Nio Inc (NIO.N) said on Wednesday there was substantial doubt in its ability to continue as a going concern, sending its shares down 12% in premarket U.S. trading.
The carmaker, seen as a challenger to Tesla Inc (TSLA.O), has been hurt by dwindling demand and reduced government subsidies for electric vehicles in China, the world’s largest car market.
The coronavirus outbreak has exacerbated the company’s woes this year, disrupting production and delivery of its cars.
Its cash balance of $151.7 million as of Dec. 31 is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months, the company said in a statement.
Last month, it signed here framework agreements with Hefei's city government to raise more than 10 billion yuan and set up new manufacturing facilities.
“The parties are working on the legally binding definitive documents to be signed,” Nio Founder and Chief Executive Officer William Bin Li said.
The company also made several private placements of convertible notes in February and March for an aggregate principal amount of $435 million to support its operations and business development.
Vehicle sales in China fell 18% in January while sales of battery electric and other so-called new energy vehicles plunged 54.4%, preliminary data from the China Association of Automobile Manufacturers (CAAM) showed.
Reporting by Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty