Tencent-backed electric car start-up NIO to file prospectus in September for planned US listing

NIO, the Chinese electric vehicle start-up backed by Tencent Holdings, will file documents in September as it prepares for an IPO on the New York Stock Exchange towards the end of this year or early 2019, the home turf of Tesla, according to Chinese media reports.

The Shanghai-based company is expected to raise US$2 billion at a valuation of US$15 billion, according to a person close to the deal, who asked not to be identified because the discussions are private.

The company is said to have hired Credit Suisse, Bank of America Merrill Lynch, Citibank and Deutsche Bank as underwriters.

The company said it had no comment on the IPO plan.

NIO had earlier submitted initial confidential filings to the US Securities and Exchange Commission and planned to take investor orders in the summer or early autumn, according to a Bloomberg report in May.

Counting Chinese technology giants Tencent, Baidu and Xiaomi among its investors, NIO first threw down the gauntlet to Tesla in December with the launch of its first production model ES8. The high-performance sports utility vehicle has a base price of 448,000 yuan (US$67,788) before subsidies, or about half the price of a Tesla Model X after import duties are added.

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The ES8 comes with a driver-assistance system featuring highway pilot, traffic jam pilot and automatic emergency braking. It also has an in-car artificial intelligence system that can help regulate the temperature, take photos and play music based on voice commands.

Plagued by the same lagging production capacity as Tesla, the company has vowed to deliver the first 10,000 cars by the end of the year, according to William Li Bin, founder and chairman of NIO.

The four-year-old start-up is among a rising wave of “Tesla challengers”, which include up-and-coming carmakers such as Byton and Xpeng that are in a race to be the next big electric vehicle major in the world’s largest market for new-energy vehicles. These companies want to rival Tesla with smart electric vehicles that feature internet connectivity and new technologies, and by leveraging their understanding of Chinese consumers.

The electric car boom also comes as China’s government started handing out special manufacturing permits to companies outside the traditional car making industry. To encourage sales, the government has also extended research and development grants and consumer subsidies, and exempted new-energy vehicles from ownership quotas in its biggest cities.

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China is seeking to cut down its reliance on imported oil and reduce pollution, while aiming to gain leadership in key technologies. Connected and self-driving cars are also seen as the natural amalgamation of several complementary technologies that the country is seeking to dominate.

Still, the IPO would come as a stark contrast to Tesla’s plan to retreat from the secondary market. Silicon Valley billionaire entrepreneur Elon Musk announced on his Twitter account on Wednesday that he will take Tesla private at US$420 per share, which values the total outstanding shares at US$70 billion.

“Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible,” said Musk in an open letter released on the homepage of Tesla, explaining the rationale of his decision.