The government of a city in eastern Zhejiang Province on Wednesday said it has ended talks with Nio about an investment to build a factory in the city, the latest blow to the troubled Chinese electric vehicle (EV) maker.

Why it matters: The statement followed rumors that Nio was in talks with a district government of Huzhou for a RMB 5 billion (around $700 million) investment deal including a factory with production capacity of 200,000 vehicles per year.

Huzhou authorities had planned conducting due diligence on Nio to decide whether to invest, as the company’s smart vehicle project “presents both great potential and certain risks,” according to a document widely circulated in Chinese media reports.

Detail: Based on the results of the due diligence assessment, the Wuxing District government in Huzhou has ended talks with Nio based on the high investment risk, the press office of the district government told TechNode on Wednesday.

A government spokeswoman acknowledged the two sides previously had held talks on the matter, but “have not signed any letter of intent.”

Nio founder and CEO Li Bin previously responded to Chinese media by saying that it has been in contact with a number of regional governments, but has no information to disclose.

Nio declined to comment when contacted by TechNode on Wednesday.

As of writing, Nio’s share prices fell 5.2% to $1.47 in pre-market trading on Wednesday. The company’s market cap has sunk 75% to $1.63 billion since going public in September 2018.

Context: Nio has hemorrhaged more than RMB 5 billion this year, widening its net losses to an excess of RMB 20 billion (around $2.82 billion) in just four years and reportedly jeopardizing ongoing investments.