NIO Plans US IPO This Year

The market for electric cars in China is exploding, and so is the number of new companies that want to build them. Chinese customers are no more or less chauvinistic than Americans — given a choice, they would prefer to buy from a local company rather than one that is located in a foreign country. Soon they will have lots of choices, as Byton, Beely, BYD, SAIC, Great Wall, and dozens of others are crowding into the Chinese market.

NIO was founded by Chinese billionaire William Li. Its first offering is the ES8 all-electric SUV, a rather traditional looking vehicle that offers performance competitive with the Tesla Model X for about half the money — $65,000 in US dollars — at least in China. Sales of the ES8 have begun and the company says it will build 10,000 of them before year’s end. It comes with a 70 kWh battery and a range of about 220 miles. It achieves 0-60 mph acceleration in 4.4 seconds thanks to two electric motors with more than 500 horsepower combined, according to our own Nicolas Zart.

So far, so good. But it’s the extras that should set the ES8 apart. The company claims it can be fully recharged in 3 minutes. If true, that is an eye-popping statistic, one that should make customers gravitate its way. To date, NIO has provided no details on how such rapid charging is accomplished. Magic perhaps?

According to the South China Morning Post, the car will also feature an onboard artificial intelligence system that helps regulate the temperature, take photos, and play music based on voice commands. The car also features a driver assistance system that includes highway pilot, traffic jam pilot, and automatic emergency braking. NIO says it has more than 16,000 reservations for a car that won’t be in full production until early next year.

If you find the ES8 a bit ordinary for your tastes, take a look at the EVE concept the company rolled out at the Beijing auto show in April. Ordinary it is not. Is it practical? Who knows, but it may be a peek at the future of automobiles. If so, bring it on!

SCMP also reports that NIO has hired Credit Suisse, Bank of America Merrill Lynch, Citibank, and Deutsche Bank to assist it in preparing for an initial public offering in the US this fall, possibly as early as September. If the plan goes forward, the money raised could help the company prepare to do business in the US and other countries around the world in the near future. NIO already counts Tencent, Baidu, and Xiaomi among its investors. Tencent has also purchased a 5% stake in Tesla.

The plan to offer shares to the public stands in stark contrast to the position of Tesla CEO Elon Musk, who astonished the financial world last week when he announced plans to take that company private. Musk’s gambit appears to be designed to give the company some relief from the constant scrutiny from the stock market community, which Musk feels forces Tesla to concentrate on short-term goals rather than long-range planning. Which it better, private or public ownership? The jury is still out and financiers will be watching Musk carefully to see if his idea is more pure distilled brilliance or utter stupidity.

According to CNN  Money, NIO’s president, Lihong Qin, said last December his company wants to “target the middle class in the big cities in China” and predicted that market will double in size in the next few years. That may be true, but that alone is no guarantee that NIO will be around to enjoy its hoped for success. Oddly enough, NIO Capital, which is partly funded by NIO, tells The Economic Times only 1% of the new Chinese electric car startups will survive over the long term. The problem for investors, as always, is picking the winners and not the losers. Good luck with that.