Photo/Zhang Xiaoqing (NBD)

Apr. 30 (NBD) -- Chinese EV maker NIO (NYSE: NIO) on Wednesday finalized its headquarters program with the country's Hefei city, Anhui Province and in the meantime the automaker secured funding from state-owned companies.

Three state-backed strategic investors will inject 7 billion yuan (roughly 1 billion U.S. dollars) into "NIO China", while NIO will base its China headquarters, including R&D, sales, service and supply chain, in Hefei, 300 miles west of Shanghai.

The investment is the first state fund for NIO and the largest fundraising since the company's IPO. Encouraged by the news, shares of the EV maker spiked as much as 20 percent in the premarket trading and closed 8.08 percent higher on Wednesday.

The 7 billion yuan investment, which is expected to be in place in the second quarter of this year, will be mainly used to better R&D, customer services and cash flow as well. "The investment will ease NIO's cash shortage for quite a long-term", said its founder Li Bin.

In addition to the strategic investors, NIO will invest 4.26 billion yuan in "NIO China", bringing the total investment amount to 11.26 billion yuan, which is not less than what the previous framework agreement says, added Li.

Upon the completion of the deal, NIO will hold a 75.9 percent stake in "NIO China", while the strategic investors will have the remaining 24.1 percent.

It's noticed that NIO has been in a loss for 4 consecutive years since 2016 and its net loss in 2019 stood at 11.4 billion yuan. Despite the fund infusion, it's vital for NIO itself to grow profitability to sustain development.

Email: gaohan@nbd.com.cn