Electric car start-up NIO prepares US$2b IPO in Tesla’s home turf

NIO, which counts Chinese technology giants Tencent, Baidu and Xiaomi among its investors, eyes public listing on Nasdaq or the New York Stock Exchange at a valuation of US$15 billion

PUBLISHED : Wednesday, 28 February, 2018, 5:39pm
UPDATED : Wednesday, 28 February, 2018, 10:53pm

Chinese electric vehicle start-up NIO has hired investment banks for its initial public offering (IPO) by the end of this year in the United States, the home turf of Tesla, with an eye to raise US$2 billion, according to a person familiar with the matter.

That public listing would put the valuation of Shanghai-based NIO at US$15 billion, said the person, who asked not to be identified because the discussions are private.

NIO, which counts Chinese technology giants Tencent Holdings, Baidu and Xiaomi among its investors, remained undecided on whether it should list on Nasdaq or the New York Stock Exchange.

The company declined to comment on the proposed IPO.

Founded in 2014 by internet entrepreneur William Li Bin, NIO had been valued at US$5 billion after its latest round of fundraising in November, according to one of the company’s investors with knowledge of the matter.

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NIO is one of a few dozen electric car start-ups that have sprouted in recent years after China’s government started handing out special manufacturing permits to companies outside the traditional car making industry. To encourage sales, the government also gave out research and development grants and consumer subsidies, and exempted new-energy vehicles from ownership quotas in its biggest cities.

China is also 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 seen as the natural amalgamation of several complementary technologies that China is seeking to dominate.

The proposed IPO of NIO followed the planned listing of state-backed Beijing Electric Vehicle Co, China’s biggest electric car maker with a US$4.5 billion valuation, in the Shanghai Stock Exchange. That deal, which was announced in January, is still pending regulatory approval.

NIO threw down the gauntlet to US electric car maker Tesla in December of last year when it launched the ES8, a seven-seater high-performance electric sport utility vehicle that will sell for about half the price of the US electric car maker’s Model X.

The ES8 will be available in the first half of this year.

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“Tesla is a company founded in the era of the internet, while NIO was born in the era of mobile internet,” said Li at the ES8 launch in December. “The new era, in which smartphones and apps play a much bigger role in people’s daily lives, gives companies like us a great opportunity to revolutionise the automobile industry.”

That launch comes amid a rising wave of “Tesla challengers”, a clutch of mainland start-ups such as NIO, 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.

A total of 777,000 new-energy vehicles were sold in mainland China last year, according to the China Association of Automobile Manufacturers. It estimated sales of electric and hybrid vehicles grew 82 per cent and 39 per cent, respectively.