(Yicai) March 28 -- Nio's stock price sank after the Chinese electric car startup raised HKD4 billion (USD514.4 million) from a discounted share placement to speed up the research and development of smart vehicle technologies.

Nio [HKG: 9866] finished 7.1 percent lower at HKD30.25 (USD3.89) a share in Hong Kong today. In pre-market trading in New York, its stock [NASDAQ: NIO] was trading down 2 percent at USD3.90 as of 5.59 a.m. local time, after retreating 5.7 percent yesterday.

Nio placed 136.8 million Class A ordinary shares priced at HKD29.46 apiece, the Shanghai-based company said late yesterday, around four hours after announcing a plan to offer 118.8 million shares "in offshore transactions outside the United States to non-US persons." That was a 9.5 percent discount on yesterday's closing price in Hong Kong of HKD32.55.

A softer share price following a stock offering is not uncommon, as the additional shares issued dilute existing shareholder equity, often leading to a perceived loss of value in their holdings and triggering a near-term sell-off.

Nio’s share placement follows similar moves by competitors this month. Shenzhen-based BYD raised HKD43.4 billion (USD5.6 billion) on March 12 to accelerate its global expansion, while home electronics and EV maker Xiaomi raised about HKD42.5 billion on March 25 to fund R&D and its business expansion.

Top international institutional investors bought the new shares, Nio said. The funds secured will go on researching and developing smart electric vehicle technologies and new products, strengthening the firm's cash reserves and balance sheet, and ensuring its long-term business development, it added.

Nio continues to face financial pressure, with its net loss widening 8 percent to CNY22.4 billion (USD3.1 billion) last year, according to its annual earnings report released on March 21. Despite revenue jumping 18 percent to a record CNY65.7 billion, the company has failed to turn a profit a decade after its establishment.

Executives said on Nio’s recent earnings conference call that a series of measures are needed to improve gross profit margin, including the mass use of its own chips, sales campaigns, and expansion of revenue from EV battery swapping tie-ups to achieve its first profit in the fourth quarter of this year.

Editor: Martin Kadiev