(Yicai Global) Jan. 16 -- Nio's stock price reached a nearly eight-month high after GAC Group, one of China's largest car firms, confirmed that it is negotiating with the new energy vehicle maker about an investment opportunity.

Nio's share price [NYSE: NIO] jumped over 14 percent to USD4.29 yesterday with a market cap of USD4.5 billion. The Shanghai-based firm raised USD1 billion in its 2018 initial public offering, pricing its shares at USD6.26.

The financing discussions are still in the early stages and it is uncertain whether a deal will be reached, Guangzhou-based GAC said in a statement yesterday.

GAC will invest USD1 billion in Nio, Chinese self-media outlets reported the same day.

Nio and GAC have partnered before by setting up a joint venture in 2018 to produce Hycan-branded concept cars. The first sport utility vehicle model is expected to be delivered in the first half of this year. 

Nio needs money. After months of talks, China's Huzhou considered building a factory together with the startup too risky, according to Chinese news reports published last October. In May, the firm said it got Beijing E-Town International Investment and Development to put in CNY10 billion (USD1.5 billion) to set up a JV.

In the third quarter of last year, the startup narrowed its loss by 10 percent to CNY2.5 billion (USD363.1 million) from a year earlier. Its revenue rose by 25 percent to CNY1.9 billion. The company delivered over 20,560 cars in 2019, almost doubling from 2018. 

Editor: Emmi Laine