ABU DHABI, UAE: Nio, a Chinese electric car company, announced Tuesday that it received $738.5 million in new capital from a fund owned by the Abu Dhabi government.

The fund, CYVN Holdings, is a subsidiary of the Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign wealth funds. The strategic investment gives CYVN Holdings a 7% stake in Nio, according to a press release.

The deal was priced at $8.72 a share, a 6.7% discount to Nio’s closing price on Tuesday. Nio’s U.S.-listed shares fell by about half a percent on Tuesday, and were down another 2% in pre-market trading on Wednesday.

Nio said the investment will help it enhance its technology, expand its market presence, and improve its operational efficiency. The company also said it will work closely with CYVN Holdings to explore potential collaboration opportunities in the Middle East and other regions.

Nio is one of the leading electric car makers in China, competing with Tesla and other domestic rivals such as Xpeng and Li Auto. The company is known for its premium SUV models and its battery swapping service, which allows drivers to quickly replace their depleted batteries with fully charged ones at designated stations.

However, Nio has been facing challenges from the global chip shortage, which has affected its production and deliveries. The company earlier this month said it delivered 6,711 vehicles in May, down 5.5% from April and below its previous guidance of 6,800 to 7,200 vehicles.

The company also said earlier this month that it was facing cash flow pressure and that it was delaying some capital expenditure and research and development projects. The company disclosed cash and cash equivalents of 14.76 billion yuan ($2.07 billion) as of March, below what it disclosed for the end of 2021 and 2022.

The investment from CYVN Holdings comes as a timely boost for Nio, which has been seeking to raise more funds to support its growth plans. The company raised $1.3 billion in convertible notes in January and $1.5 billion in an equity offering in August last year.

Nio said it expects to deliver 21,000 to 22,000 vehicles in the second quarter of 2023, and aims to achieve positive cash flow from operations by the end of the year. The company also plans to enter the European market later this year, starting with Norway.

CYVN Holdings said it was impressed by Nio’s vision, innovation, and execution, and that it looked forward to supporting the company’s long-term development.

“Nio is at the forefront of the electric vehicle industry in China and globally, with a proven track record of delivering high-quality products and services that meet the evolving needs of customers,” said Hamad Shahwan Aldhaheri, Executive Director of the Private Equities Department at ADIA and Chairman of CYVN Holdings.

“We are confident that Nio will continue to play a key role in advancing the future of smart mobility.”

Nio invests in fusion startup Neo Fusion to diversify its energy portfolio