China’s Tesla-killer ready to go public in NY

A Nio concept car on display during the Beijing Auto Show in April

Chinese electric vehicle manufacturer NIO has filed for a US$1.8 billion initial public offering in the United States as the burgeoning company seeks to compete with U.S. rival Tesla.

The company, backed by Chinese tech heavyweight Tencent Holdings Ltd, applied for a float of up to $1.8 billion, according to its filing with the Securities and Exchange Commission. The company is initially targeting China's premium battery-electric SUV market.

NIO plans to launch a new model every year after the ES8: five-seater medium-sized SUVs ES6, five-seater compact SUVs ES3, Cross Coupe ET5, sedan ET3 and MPV EF9. The new vehicle will be officially delivered in the first half of next year. As of July 31, NIO had a total of 17,000 valid orders, produced more than 1,300 ES8, and delivered 481 of them.


NIO Capital says that the huge costs involved in starting an electric vehicle company from scratch is the main reason why 99 percent of the will fail. Files showed that in 2016, 2017, and the first six months of 2018, the company had a net loss of 2.57 billion yuan, 5.01 billion yuan and 3.33 billion yuan respectively. Other investors include Baidu Capital, Shunwei Capital, a venture capital co-founded by Xiaomi founder Lei Jun, and Baillie Gifford. The company's CEO, Bin Li, is chairman of Bitauto Holdings Limited, a company that provides services for the auto industry in China. Its Pilot technology, which includes automatic emergency breaking and other features, is available inside the ES8 vehicle, and Nio is one of 55 companies with permission to test autonomous vehicles on California public roads. Nio chiefs hope the figures will even out as it delivers more ES8s to customers, although rival electric brand Tesla has proven that achieving this is easier said than done. Additionally, changes to government policies that help the sales of electric and Chinese-made cars could also cause problems, as could the U.S. Nio has said it plans to sell cars in the US beginning in 2020, but a potential trade war between the USA and China could interfere with those plans.

Lead underwriters on the deal are Morgan Stanley (NYSE: MS), Goldman Sachs (Asia) LLC (NYSE: GS), and J.P. Morgan (NYSE: JPM).

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