(Yicai) Nov. 25 -- Both BYD and Nio have moved quickly to dismiss a claim made by an individual purporting to be an employees of China’s largest carmaker that it plans to acquire the electric vehicle startup and set up a joint venture together.

The rumor about BYD acquiring Nio is false, Li Yunfei, general manager of branding and public relations at the Shenzhen-based company, said on Weibo, adding that people should stop spreading rumors. The firm's legal department also announced that the authorities are looking into the matter after Nio reported it.

Writing on social media on Nov. 22, the person said BYD and Nio will form a JV called Bi Wei Lai Automotive Group, which will be 51 percent owned by the former, and BYD will buy Nio for CNY16.5 billion (USD2.3 billion), though the Shanghai-based EV startup will continue to operate independently.

Nio’s operations remain good, with positive cash flow last quarter and better gross profit last month, Ma Lin, assistant vice president of branding and communications, said on Weibo. The company expects to sell more than 10,000 of its family-orientated second brand, Onvo, next month, Ma added.

The acquisition rumor comes amid speculation about consolidation in China’s auto industry, the world’s largest, as a result of intense competition. Experts expect the ranks of players in the industry to be thinned out, with just a handful of champions left standing. The leaders of major Chinese EV makers have echoed these predictions, describing the industry as entering a "knockout round" or "brutal elimination round.”

The odds of Nio being acquired before it faced significant operational difficulties is extremely low, according to analysts. They noted the very different market positionings of BYD and Nio, and said Nio founder William Li would likely resist selling the brand.

But the possibility of future cooperation between BYD and Nio cannot be ruled out, the analysts said. As China's largest automaker, BYD has strong supply chain and technical support advantages, while Nio's high-end market positioning could give BYD with chance to expand into new product lines, they said.

Nio delivered 170,257 vehicles in the nine months ended Sept. 30, with its net loss remaining unchanged at CNY15.5 billion. Revenue jumped 20 percent to CNY46 billion from a year earlier.  BYD sold 2.75 million cars in the period, a 32 percent increase. Its net profit rose 18 percent to CNY25.2 billion, while revenue climbed 19 percent to CNY502.3 billion (USD69.4 billion).

Editor: Martin Kadiev