NIO Files for IPO

NIO Files for IPO

While Tesla seems to be taking over the news recently, there is a competitive threat from China looming in the background. Nio, an electric vehicle company, just filed for a $1.8billion US IPO on the NYSE.

For those unfamiliar, Nio started off as Nextcar. Founded by Bin Li, who has experience in the space through his auto platform Biauto, started the company in 2014 with some tall hopes and ambitions.

The company has been private since 2014 – backed by some of China’s largest technology companies and entrepreneurs – and has made a great deal of progress manufacturing new car concepts. Most notably, they’ve released the EP9 supercar and the ES8.

The EP9 could probably be compared to Tesla’s Roadster. It’s a small and fast car that holds the record for fastest electric vehicle. The ES8, which is pictured above, is a sedan designed for everyone and priced at around $65,000.

Nio opened sales for the ES8 last year but it only began shipping in June of this year. They’ve fulfilled 481 orders to date, and desire a ramping up of manufacturing speed in the future. It seems they have a lot more in common with Tesla than you might have initially thought.

Financials

The company reported $6.9 million in revenue as of the end of June. With a total loss of $502 million for 2018 to date, they are spending a ton of money to produce these cars. For example, Nio lost a total of $759 million in 2017, which included no revenue and nearly $400 million spent on research and development practices.

Selling Differently

Instead of traditional stores, the company operates what they consider ‘clubhouses.’ This is where they sell to new customers and allows existing owners to hang out in their spare time. Apparently, it’s become quite a community for the early adopters.

Nio’s pricing is more focused on mid-market. This has been somewhat of an issue for outsiders because of how difficult it is for families to charge these vehicles at home. For example, the vehicles support battery swapping at dedicated stations just to make it a bit easier for owners on the go.

A Different Way To Charge

The company has modeled a subscription-based package around on-demand charging. This will undoubtedly allow the company to increase their future revenue beyond car sales alone. In the future, however, the vehicles are expected to be fully compatible with the national EV charging network China is developing around the country.

Manufacturing

As it stands now, state-owned JAC Motors handles product but Nio has pledged to invest $650 million to construct its own manufacturing plant in Shanghai. Nio’s order pipeline right now will take six to nine months to process, while having their own factory would mean orders could be fulfilled within 28 days of purchase.

That would be quite a leap forward for them.

Geography

The company is currently focused on selling to China. That said, they do have a presence around the globe, which should allow them to spread their wings whenever they deem it necessary. NIO is headquartered in Shanghai and employ nearly 2,500 workers. In addition, they have teams in Munich for design, San Jose for software, and London to handle the new vehicle concepts.

Who is Behind NIO?

NIO’s Board and Executive leaders are mostly Chinese. One familiar name that you might recognize is Padmasree Warrior – who is the head of Nio’s U.S. business. As the former Motorola CTO, she joined the company in 2015 after calling time on Cisco, where she had been chief technology and strategy officer for several years.

Get Ready!

We’ll see where an IPO of this size takes NIO in China, the U.S., and around the world. Personally, I’m looking forward to seeing NIO enter the U.S. market to go head-to-head against Elon Musk. That will definitely be a show worth watching.

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