CATL in talks to buy controlling stake in Nio's power unit, sources say
SHANGHAI, April 7 (Reuters) - Chinese battery giant CATL (300750.SZ), opens new tab is in talks to buy a controlling stake in electric vehicle maker Nio's (9866.HK), opens new tab power unit, which runs more than 3,000 battery swapping stations in China, four people with knowledge of the matter told Reuters.
CATL made the proposal after announcing a maximum 2.5 billion yuan ($342 million) investment in the unit, Nio Power, in March, said the sources, who asked not to be named because the talks are not yet public.
The sources did not say how much CATL was offering under the proposed deal. However, one of them said Nio Power had been valued at more than 10 billion yuan during a 2024 fundraising round.
CATL declined to comment on the proposal when contacted by Reuters.
Nio did not directly address questions about the possible deal but said it was promoting joint construction of battery swapping stations "with multiple investors, including CATL".
"Nio and CATL will deepen collaboration on capital and business and further consolidate the strategic partnership to jointly build the largest battery swapping network globally," Nio wrote in a response to a Reuters request for comment.
CATL is ramping up investments in battery swapping facilities as chairman Robin Zeng aims to reinvent his 25-year-old enterprise, pushing beyond battery manufacturing to become a green-energy provider.
The company, which aims to lead a trend it says will replace a third of gas stations in China, announced a partnership with state-owned oil company Sinopec (600028.SS), opens new tab last week to build 10,000 battery swap stations. At least 500 of them will be built this year.
Nio Power, one of Nio's core assets, provides charging and battery swapping services to Nio drivers and other EV brands including Tesla (TSLA.O), opens new tab and BYD (002594.SZ), opens new tab.
The unit's potential sale reflects the intensifying competition Nio faces in China's auto market.
In an effort to ease consumer concerns over EVs' limited range, Nio has built some 3,240 battery swapping stations, mostly in China, that allow customers to replace a depleted battery pack with a fully charged one in less than three minutes.
The investments, however, have been a drag on the company's profitability.
Nio has also been co-developing EVs that can swap batteries with other automakers' models.
($1 = 7.3086 Chinese yuan renminbi)
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Today's Key Market Moves London calling, stocks crawling higher It was a fairly quiet start to the week across global markets on Monday, with strong equity gains in Asia followed by a grind higher on Wall Street which lifted the MSCI World index to a fresh record high. The main areas of focus for investors were China's economic 'data dump' for May, then the high-level U.S.-China trade talks in London. The two are connected - the U.S. is a less important market for China than it used to be, underscored in May's trade figures from Beijing and reflected in the lack of concrete progress from the negotiations in London. China's total exports rose 4.8% in May from a year earlier but this masks a huge split between the U.S. and the rest of the world. Exports to the U.S. plunged 34.4% year-on-year in value terms, the sharpest drop since February 2020 just before the pandemic, while exports to the rest of the world rose 11.4%. 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But now, investors are increasing their hedging," says Sophia Drossos, economist and strategist at the hedge fund Point72. And there is a lot of dollar exposure to hedge. At the end of March foreign investors held $33 trillion of U.S. securities, with $18.4 trillion in equities and $14.6 trillion in debt instruments. The dollar's malaise has upended its traditional relationships with stocks and bonds. Its generally negative correlation with stocks has reversed, as has the usually positive correlation with bonds. The divergence with Treasuries has gained more attention, with the dollar diving as yields have risen. But as Deutsche Bank's George Saravelos notes, the correlation breakdown with stocks is "very unusual". When Wall Street has fallen this year the dollar has fallen too, but at a much faster pace. And when Wall Street has risen the dollar has also bounced, but only slightly. This has led to the strongest positive correlation between the dollar and S&P 500 in years, though that's a bit deceptive, as the dollar is sharply down on the year while stocks are mildly stronger. Of course, what we could be seeing is simply a rebalancing. Saravelos estimates that global fixed income and equity managers' dollar exposure was at near record-high levels in the run-up to the recent trade war. This was a "cyclical" phenomenon over the last couple of years rather than a deep-rooted structural one based on fundamentals, meaning it could be reversed relatively quickly. But, regardless, the dollar's hedging headwind seems likely to persist. "Given the size of foreign holdings of both stocks and bonds, even a modest uptick in hedge ratios could prove a considerable FX flow," Morgan Stanley's FX strategy team wrote last month. "As long as uncertainty and volatility persist, we think that hedge ratios are likely to rise as investors ride out the storm." What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
