Nio Stock Soars on ForSeven Deal, Li Auto Surge

On Monday, Nio shares jumped amid a technology licensing deal with UK-based startup ForSeven, buoyed by Li Auto trouncing earnings estimates.

The Chinese electric vehicle (EV) maker’s stock rose 4.63% to $5.65 per share on February 26. Furthermore, industry watchers anticipate a 1.77% gain to $5.75 apiece on the following trading day.

Nio announced that its collaboration with the subsidiary of the Abu Dhabi government-controlled CYVN Holdings was finalized earlier this month. The agreement grants ForSeven non-exclusive and non-transferable access to some of the automaker’s current and future technologies.

In exchange, the Chinese EV giant receives technology license fees, comprising a non-refundable downpayment and royalties on future ForSeven products. Unless terminated, the partnership will continue until the licensee enters mass production of the licensed products.

However, Nio can end the license deal prematurely under certain circumstances, including if another automaker acquires ForSeven. Meanwhile, the Shanghai-headquartered company accepted two CYVN-chosen persons into its board of directors to facilitate communication.

The licensing deal mirrors the 2023 agreement by Nio’s rival Xpeng, which granted it access to Volkswagen technology in exchange for a share of revenues. It triggered a shift away from the 40-year-old model of foreign carmakers charging Chinese partners cash fees for tech licensing.

Li Auto Skyrockets, Lifting Nio and Other EV Firms

Chinese carmaker Li Auto crushed estimates in its fourth-quarter earnings report released early Monday, boosting Nio and other EV firms. It posted earnings per share of $0.60, beating the $0.44 market consensus and marking a 1,400% year-over-year (YoY) increase from $0.04 in Q4 2022.

In addition, the EV company’s revenue climbed 130.00% YoY to $5.88 billion, topping the projected $5.50 billion. Thus, its stock advanced 18.79% to $41.34 per share, providing a much-needed boost for the struggling EV industry.

Li Auto showed that EV demand had not slowed as much as expected, boosting investor confidence across the industry. As a result, shares of several major electric automakers jumped sharply, including Nio, Tesla, and BYD.