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NIO Files $1.8 Billion IPO, the Largest of Any Chinese Automaker

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【Summary】Chinese electric vehicle start-up NIO on Monday filed for a $1.8 billion initial public offering of its American depositary shares, the largest U.S. listing to date by a Chinese automaker.

Eric Walz    Aug 15, 2018 1:08 PM PT
NIO Files $1.8 Billion IPO, the Largest of Any Chinese Automaker

Chinese electric vehicle start-up NIO on Monday filed for a $1.8 billion initial public offering of its American depositary shares, the largest U.S. listing to date by a Chinese automaker.

NIO was founded by Chinese entrepreneur William Li in 2014 and the company is backed by Chinese tech giant Tencent. The company applied for a float of up to $1.8 billion, according to its filing with the Securities and Exchange Commission.'

The electric automaker, which is sometimes referred to as the "Tesla of China", plans to go public on the New York Stock Exchange under the symbol "NIO".  Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch and J.P. Morgan are among the underwriters.

The announcement of NIO's IPO comes as U.S. automaker Tesla is exploring a return to become a private company. NIO creating some new competition for Tesla, especially in China NIO's ES8 is priced around 448,000 Chinese yuan, or $64,600, well below the price of a Tesla Model X in China.

NIO plans to redefine the car ownership experience. The ES8 features an advanced interior with intelligent AI system capable of autonomous driving. The company is among a handful of electric vehicle startups looking to raise capital to develop new products and advanced EV battery technologies.

China aims to become a major producer of electric vehicles as the country looks to new energy vehicles (NEVs) as a way to curb the country's notorious air pollution and take the lead in battery-powered technology. Regulations adopted last year require EVs to account for up to 8 percent of sales by 2020.

NIO, formerly known as NextEV, is one of several largely Chinese-funded EV startups betting on the benefits of local production to compete with firms such as Tesla Inc. Its other backers include investment firms Hillhouse Capital Group, Sequoia Capital and a private equity fund established by Baidu.

"NIO is just getting started early," said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight of its IPO plans. "(China's) new energy car industry is just starting, it's a marathon process."

NIO-EP92222.jpg

The NIO EP9 electric supercar

In June, NIO began deliveries of its battery-powered ES8 a seven-seat sport-utility vehicle, which the company sees as a rival to Tesla's Model X. It also plans to launch a second, lower-priced electric sport-utility vehicle, the ES6, by the end of this year.

The company only started generating revenue this year. In the first half of 2018, it recorded just $7 million in sales and made a loss of $503 million. By comparison, Tesla already has about $2 billion in annual sales in China. Tesla hopes to eventually build as many as 500,000 cars a year in China by setting up a huge factory in Shanghai.

NIO said it had delivered 481 ES8s as of the end of July and had unfulfilled reservations for another 17,000.

The company is also well known for its EP9, a 1342 hp high-performance electric supercar. In October 2016, the NIO EP9 set a record at Germany's famed Nürburgring Nordschliefe, making it the fastest electric car in the world. The EP9 accelerates from 0-124 mph in 7 seconds and has a top speed of 194 mph. The car is equipped with an interchangeable battery system, the EP9 is designed to be charged in 45 minutes and has a range of 265 miles.

NIO mainly plans to use the proceeds from its IPO for research and development of products and EV technology, marketing and developing production facilities.

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