NIO electric vehicle startup to challenge Tesla with USD 2 billion IPO

28/02/2018

It is rumored that Chinese electric car company NIO is planning an IPO before the end of the year on the American exchanges. Shanghai-based NIO is seeking investors to inject an additional USD 2 billion this year, bringing its valuation to USD 15 billion. The company’s current investors include Tencent, Baidu, and Xiaomi.

NIO declined for comment, although a source close to the company said it’s undecided whether to list on the Nasdaq or NYSE. The IPO follows Beijing-backed Electric Vehicle Co’s IPO on the Shanghai Stock Exchange, which is still pending approval from regulators.

NIO is one of a dozen Chinse electric vehicle companies hoping to challenge Tesla, both in valuation and IP. Last December, NIO launched the ES8, a seven-seater SUV selling for half the price of Tesla’s comparable Model X.

Whenever China sees a surge in a certain manufacturing sector, a trail of crumbs most often leads back to Beijing. In recent years, the government started doling out manufacturing permits to electric vehicle start-ups, disrupting the existing industry. The government then promoted innovation by giving companies grants for R&D and drove consumption with consumer subsidies.

In perhaps the most lucrative move of all, electric vehicles were then made exempt from ownership quotas in big cities. Current restrictions on car ownership mean that prospective buyers must participate in a lottery to obtain plates, which are then sold for a high dollar value. It’s not uncommon to wait years for the chance to purchase and register a vehicle.

Founded in 2014 by internet entrepreneur William Li Bin, NIO had a valuation of USD 5 billion after its last round of funding in November. The leap from USD 5 billion to USD 15 billion may prove difficult, but the growing popularity of electric vehicles should help things along. Mainland China purchased about 777,000 clean-energy vehicles last year for a 43% increase in sales, according to the China Association of Automobile Manufacturers.

Other Tesla Challengers include Byton and Xpeng, which join NIO as frontrunners in the race to be the biggest electric vehicle maker for the world’s biggest electric vehicle market.

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