Nio stock rises as firm acquires a 12% stake in an Australian lithium company, Greenwing

Nio stock was trading slightly upwards at $18.14 as of 09:38 AM EDT.

According to a Monday post from CnEVPost, Australian lithium company Greenwing has bought a stake from Chinese EV manufacturer Nio (NYSE:NIO). In accordance with the terms of their strategic financing agreement, Nio (NIO) agreed to pay $12 million to subscribe for 21.82 million Greenwing shares at a deemed issue price of A$0.55 per share.

After the transaction is completed, Nio (NIO) will own 12.16% of Greenwing. As long as it holds at least 10% of the shares, it will also be eligible to be nominated for the firm’s board of directors.

NIO: A Quick Reality Check

With the help of strategic finance, Greenwing is able to quicken the exploration process at the San Jorge Lithium Project in Argentina, positioning Nio (NYSE:NIO) as a possible joint venture and offtake partner. The automaker has a call option to purchase 20% to 40% of Andes Litio, the company that holds the rights to the lithium property, in the company’s issued capital.

According to CnEVPost, the call option is exercisable within 365 days of the project’s JORC report’s release or acquisition and, if realized, may result in an exercise price of between $40 million and $80 million. A JORC report on the San Jorge Lithium Project must be published by December 31, 2023, according to a commitment made by Greenwing.

Nio stock forecast 

After the call option is exercised, Nio (NYSE:NIO) will have direct offtake production rights to the project. The agreement appears to be the most recent action Nio (NIO) has taken to get ready for access to battery raw material supply in the long term. The business had described its plans to create batteries in June.

The premarket price of Nio’s (NYSE:NIO), the U.S. listed shares, increased by about 1%. Compared to their 2021 highs, the shares of electric vehicle producers NIO (NIO), Lucid Group (LCID), and Rivian Automotive (RIVN) have fallen precipitously by 58%, 75%, and 81%, respectively. When you take into account the high likelihood that EV sales will continue to rise, this makes them highly alluring. Investors should exercise extreme caution when making this comparison between those firms and venerable automakers Ford (NYSE:F) and General Motors (NYSE:GM). Contributors Jason Hall and Jeff Santoro to the Fool discuss that crucial number in this clip.

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