Cash-strapped EV startup Nio has been thrown a lifeline by a consortium of Chinese state-owned enterprises.

Under the deal announced Wednesday, Nio will receive 7 billion yuan (approximately $1 billion) from a consortium of investors led by Hefei City Construction and Investment Holding, CMG-SDIC Capital, and Anhui Provincial Emerging Industry Investment.

In return, Nio will establish the separate company Nio China, and transfer its core assets and businesses located in China into the new entity. The assets being transferred include R&D, supply chain, sales and services, and the Nio Power network of charging stations.

Nio will own 75.9 percent of Nio China with the remainder to go to the consortium of investors. The deal is expected to close in the second quarter of 2020.

Nio CEO and Chairman William Li introduces the 2020 EC6

Nio CEO and Chairman William Li introduces the 2020 EC6

While Nio's headquarters will remain in Shanghai, a new headquarters for Nio China will be established in Hefei, in China's Anhui province. The city is where Nio builds its cars at a factory owned by a joint venture Nio has with Chinese state-owned automaker JAC Motors.

Nio listed on the New York Stock Exchange as American depositary shares back in 2018. The shares were listed at a price of $6.26 and reached $10 in the months that followed before dropping significantly. News of Nio's new investment saw the share price on Wednesday jump 8 percent to close the day at $3.61.

The company, which is often billed as the Tesla of China, had a tough 2019 and 2020 is likely to be equally hard due to the Covid-19 coronavirus pandemic. The company posted a loss of about $1.6 billion in 2019 and said it had just $161.7 million in cash reserves at the end of the year. Its total sales for 2019 came in at just 20,565 units.

The company currently sells vehicles exclusively in China. They include the ES6 and ES8 battery-electric SUVs. A coupe-like SUV called the EC6 was unveiled last December and confirmed at the time for a market launch in September 2020.