Future Automotive's Rescue by Hefei

When NIO had only one breath left, why did Hefei gamble seven billion to save it?

In 2019, William Li said, "We negotiated everything we could. I could accept any conditions, but we still couldn't find a single penny."

When these words come from the CEO of a US-listed company, you know how miserable NIO was at that time.

Its stock price fell from $6.26 at IPO to $1.19, just one centimeter away from the $1 delisting red line.

Some investment banks directly cut the target price to $0.9. The message was clear: don't bother saving it, just wait to die.

With an annual loss of 11.3 billion, burning through 26.7 billion in three years, and net assets of only 456 million, the CFO resigned.

From April to June 2019, the ES8 had four consecutive spontaneous combustion incidents, recalling over 4,800 vehicles. Consumers shook their heads at the mere mention of NIO.

Wall Street was selling off, Hillhouse Capital was liquidating its position, and someone online gave William Li a title: "The most miserable person of 2019."

William Li later said that during the most anxious times, he wasn't even sure if they could pay next month's salaries. To survive, he started looking for money all over China. Beijing Yizhuang State-owned Investment negotiated ten billion, but it fell through.

News of cooperation came from Huzhou, Zhejiang, but Huzhou officials directly issued a statement denying it. One after another, a total of 18 cities all rejected him. It wasn't that they didn't want to help, but no one dared to gamble.

An emerging car company with annual losses of tens of billions, stock price almost falling to waste paper, and cars still spontaneously combusting—who would dare to jump in? Then, Hefei came.

In January 2020, William Li finished a meeting in Hefei and was about to take the high-speed train back to Shanghai. While waiting at the station, he sent a New Year's greeting to a friend. The friend replied, "Don't leave. Talk to the Hefei government." When William Li later recalled this detail on CCTV, he spoke very honestly. He really didn't have any expectations for Hefei, as the previous 18 had all ended the same way.

Why would the 19th one be any different? He was already numb from being rejected.

When the people from Hefei met him, they didn't beat around the bush and said directly, "Why don't you talk to Hefei and give it a try?"

With just this one sentence, NIO's fate began to turn around.

Over the next month or so, Hefei conducted carpet-style due diligence on NIO, turning the finance, technology, and market teams upside down, item by item.

After the investigation, Hefei reached a conclusion and signed a framework agreement on February 25, 2020.

The official contract was signed on April 29. From contact to finalization, it took only 65 days.

How fast was it? The outside world later gave this pace a name: "Hefei Speed."

The specific plan was like this: Hefei Construction and Investment, SDIC Merchants, and Anhui High-tech Investment, three strategic investors, jointly contributed seven billion yuan.

Of this, Hefei state-owned assets contributed five billion, and NIO itself invested another 4.26 billion.

After the transaction was completed, NIO held 75.9% and the state-owned assets held 24.1%. And that wasn't all. Less than two months after the agreement was signed,

7.356 billion yuan in cold, hard cash arrived. The first thing William Li said when he got the money was, "The company is out of the ICU."

This is no exaggeration. At the end of 2019, NIO was indeed lying in the ICU with tubes all over its body. Hefei's seven billion was like a shot of adrenaline, injected straight in.

But you have to know that Hefei wasn't doing charity. There was a list of hard targets in the agreement.

Revenue of 14.8 billion in 2020, 120 billion in 2024, and total revenue of 420 billion by 2025, with total tax of 7.8 billion. If not met, they must repurchase with principal and interest at an 8.5% annual interest rate.

Yu Aihua, Secretary of the Hefei Municipal Party Committee, later said something very practical: "Only by sharing hardships first can we share wealth."

Everyone saw what happened next. In 2020, NIO survived. In January 2021, its stock price surged to 66 dollars, and its market value exceeded 100 billion dollars. What does that mean? It surpassed BMW, GM, and Ford combined.

Hefei reduced its holdings three times, NIO repurchased over eight billion, and the three state-owned entities still hold about 6.5% to this day, making a fortune on paper.

In 2024, Hefei added another 3.3 billion. This time, it wasn't an emergency rescue, but continuing to double down.

Many people say Hefei's development relies entirely on sheer luck, but that's not the case at all. In the early years, Hefei heavily invested in home appliances, screens, and chip industries.

Later, when NIO was on the verge of collapse, Hefei stepped in with seven billion to save it. This was by no means an impulsive waste of money.

The government team thoroughly understood all of NIO's financial accounts, calculated all the pros and cons, and only dared to put down this huge sum after rigorous study and judgment.

Yu Aihua's words are most appropriate here: if Hefei hadn't lent a hand back then, NIO would likely be gone.

But looking at it from another angle, if Hefei hadn't had a mature industrial layout and long-term vision in home appliances, panels, and chips, even if NIO ran itself ragged with its proposal, it would have only become the 19th city to reject them.