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Nio’s Shares Rise Amid Rumors of a Battery-Unit Spinoff.

Nio Inc. (NIO) stock was up about 6% late Wednesday afternoon after Reuters reported that the Chinese electric vehicle (EV) startup was considering spinning off its battery manufacturing unit.

According to two persons with knowledge of the situation, the battery-unit spin-off could happen within weeks, according to Reuters. The move would represent a shift in Nio’s business strategy and could reduce the company’s time to profitability. According to Reuters, the new battery production unit would be manned by the division’s top engineers, while other personnel in Nio’s current battery department would be relocated to other teams.

During the company’s earnings call on Tuesday, Chief Executive Officer (CEO) William Li stated that Nio will continue with battery research and development but would begin outsourcing battery manufacture, but he did not provide specifics.

The announcement came just one day after the struggling automaker posted good third-quarter profitability, including notably improved vehicle deliveries and reducing losses.

More than 55,000 car deliveries were made in the third quarter, more than doubling from the previous quarter and representing a 75.4% rise year on year.

Gross profit fell 12.2% year on year in the third quarter, but increased 1,650.9% compared to the second quarter of 2023.

Following its previous-quarter earnings call in August, Nio’s share price plummeted, and the business subsequently sold roughly $1 billion in convertible notes to generate funds.

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