Chinese EV maker Nio's shares plunged 7.16 percent on Friday on the announcement that it would issue an additional 60 million ADSs.

Nio has not yet announced the price of the offering, but based on Thursday's closing price, it would raise $2.7 billion. If the over-allotment option is taken into account, it would raise more than $3.1 billion.

Prior to the latest plan, Nio had raised more than RMB 32.8 billion ($5 billion) in cumulative funding this year. Many people wonder why Nio is taking this action again at this time.

In a recent interview with Chinese media, Nio explained that it has sufficient funds and resources to ensure the company's operation and development, but from the perspective of safeguarding the company's long-term competitive advantage, it will make the best choice for the company's long-term development according to the changes in the market.

Nio's additional share offer comes after Tesla, Xpeng, and Li Auto.

On December 4, Li Auto announced its intention to issue 47 million ADSs to raise about $1.36 billion; on December 8, Tesla announced that it would offer new shares to raise $5 billion; on December 9, Xpeng announced a plan to offer an additional 48 million ADSs to raise $2.16 billion.

Caijing.com.cn quoted Nio as saying that its ADS offering is not directly related to the financing plans of other companies, it just thinks it is a good time to raise funds after evaluating the current capital market situation, investors' recognition, and its development plan.

Nonetheless, the purpose behind Nio's financing is clearly to strengthen its existing strengths and make up for its immediate shortcomings. For Nio, it is especially important to strengthen its shortcomings in autonomous driving technology.

In 2019, Nio cut back a lot on its autonomous driving business unit due to financial constraints and turned to Mobileye for cooperation. This caused the company's self-research strength to lag.

However, as its finances stabilize, high-level autonomous driving self-research is back on the company's agenda.

Nio said it has accelerated the development of its second-generation autonomous driving technology platform, NT2.0, with the goal of making it "an industry-leading, production-ready autonomous driving system.

NT2.0 will be used in the next new model, with leaps and bounds in hardware specifications and ADAS/AD software capabilities, details of which will be announced on Nio DAY which is expected to happen on January 9.

In addition, the size of Nio's internal autonomous driving R&D team has reached 200 people, and the R&D staff pool will be further expanded as development progresses.