The NIO Inc. ES6 electric sport utility vehicle (SUV) stands on display at the Auto Shanghai 2019 show in Shanghai, China, on Tuesday, April 16, 2019.

Shares of Chinese electric carmaker NIO surged nearly 30% in pre-market trade Tuesday after it said it was in talks for funding and new factories.

U.S.-listed NIO said it was in discussions with the government of Hefei. The city is a hub for automakers and the capital of Anhui province, which borders the province of Hubei where the new coronavirus reportedly began.

Part of the talks are around specific terms for a funding round which could raise more than 10 billion yuan ($1.4 billion) for the company. NIO also plans to build a China headquarters in Hefei in addition to research and development centers, and manufacturing facilities.

NIO said more details will be released once they are available.

The investment will be a welcome boost for the cash-strapped and loss-making company which is among the dozens of Chinese electric carmakers vying to take on Tesla.

China's electric car market had a rapid rise over the past few years boosted by government subsidies. But those incentives have slowly been reduced and that has caused a slump in sales of new energy vehicles which fell 54.4% in January, according to the China Association of Automobile Manufacturers. That slump may have been, in part, due to concerns over the virus but that's the seventh consecutive month of decline.

The financing talks will be a welcome boost for confidence in China's business communities as companies try to get back to normal after a longer-than-usual shutdown after the Lunar New Year holiday.

"The Hefei government noted the agreement with NIO is one of 8 major deals the city has signed as part of an effort to control the virus while supporting economic development," according to a statement from the city government's website which was translated by CNBC.

Tesla, which began delivering its Model 3 cars in January in China, re-opened its factory in Shanghai on February 10.