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Electric Automaker NIO Launches $1.3 Billion IPO

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【Summary】Chinese electric automaker NIO launched a U.S. stock sale that could raise up to $1.32 billion. NIO is looking to top Tesla’s Model X in China with its new electric SUV the ES8.

Eric Walz    Aug 29, 2018 12:51 PM PT
Electric Automaker NIO Launches $1.3 Billion IPO
author: Eric Walz   

Chinese electric automaker NIO launched a U.S. stock sale that could raise up to $1.32 billion. The company is looking to tap the public markets before generating any substantial revenue. NIO is looking to top Tesla's Model X in China with its new electric SUV the ES8.

The Shanghai-based electric carmaker is planning to list on the New York Stock Exchange in about two weeks, according to the South China Morning Post.

NIO launched an initial public offering of 160 million American depositary receipts (ADR) at a price range of $6.25 to $8.25. That values the car maker over $8 billion ahead of its trading debut.

At the higher end of the price range, NIO could raise gross proceeds of $1.32 billion. The company could raise as much as $1.52 billion in total if an option to sell 15% more stock is exercised after the shares begin trading. Share are expected to begin training on Tuesday, September 12.

NIO's offering is smaller than what NIO was aiming for earlier this year, when the company was hoping to raise at least $2 billion in its IPO, according to an earlier report by The Wall Street Journal.

NIO was incorporated in 2014 and is led by Chinese entrepreneur William Li, who is often referred to as the "Elon Musk of China". He serves as the company's chief executive. Li will control 48.3% of the company's voting rights after the IPO.

In December 2017, NIO launched its first production car model the ES8, an all-electric sport-utility vehicle. The company has delivered close to 500 vehicles to customers so far. It said in its listing prospectus that it had 15,761 unfulfilled reservations for the vehicle.

NIO also plans to launch a second, smaller SUV this year called the ES6, with deliveries to Chinese customers expected to start during the first half of 2019.

As a relatively new auto company, NIO has yet to turn a profit. The company generated revenue of $7 million in the first half of 2018 and reported a net loss of $503 million, according to its prospectus. The company plans to be a global brand. In addition to its Shanghai headquarters, NIO has R&D and software offices in Munich, London, and Silicon Valley.

The company was last valued at $5 billion in a private capital round in November 2017. NIO's other shareholders include entities affiliated with Chinese internet giant Tencent Holdings Ltd. and investment firm Hillhouse Capital Group.

Hillhouse is planning to buy at least $150 million worth of the IPO shares, according to people familiar with the matter.

By September, NIO will operate its ‘brand experience centers' in prime locations such as Shanghai Tower. The company calls these spaces ‘NIO Houses' for people to hang out and socialize with other NIO owners.

The spaces include a coffee bar offering signature coffee, library, open kitchen space, vehicle showroom, as well as bookable meeting rooms and co-working spaces. NIO plans to open NIO Houses in ten different Chinese cities by the end of the year.

NIO is also building a network of ‘Power Swap Stations' that allow NIO drivers to switch out their car batteries for fully charged ones. The stations also offer DC fast charging in about one hour. NIO is planning to build 1,100 of these stations in China by 2020.

The ES8 is priced around $68,000, roughly half of the price of a Tesla Model X in China. The company hopes its luxury ownership experience and advanced vehicle models, which include AI and autonomous driving capability, set it apart from Tesla and the many other Chinese electric vehicle startups.

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