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IPO Roundup: China's wannabe 'Tesla killer' NIO Ltd trading above US$14 on NYSE

The electric-car maker is making money for early investors after pricing IPO between US$6.25 to US$8.25, which was on the lower side of expectations

NIO company executives with the ES8
The Chinese electric-car maker has listed on the New York Stock Exchange under the ticker 'NIO'

Shares of Shanghai-based electric-vehicle maker NIO Limited (NYSE:NIO), which has billed itself as a potent rival to Tesla, were trading at US$14.67 Thursday morning after an underwhelming IPO.

NIO priced its initial public offering in New York Wednesday and came in at the bottom of its range of $6.25 to $8.25 per share. The 160mln American depositary shares sold raised US$1bn, which was lower than expected. The IPO pricing places a $6.4bn valuation on Nio.

The Chinese electric-car maker went ahead with its New York IPO despite the tough environment exacerbated by President Trump’s trade war.

READ: Chinese Tesla rival NIO revs up US$1.3bn IPO on NYSE

Swedish luxury car maker Volvo Cars and its Chinese owner Geely postponed plans Wednesday for a dual Stockholm and Hong Kong listing, blaming trade tensions and a downturn in car stocks.

“The startup, backed by Chinese internet giant Tencent Holdings Ltd (HKG:0700), had to contend with a difficult market environment. Shares in rival car makers have slumped and Chinese stocks have been buffeted by concerns about growth, trade and currency weakness,” reported The Wall Street Journal.

“The fundraising was also a test of investors’ confidence in the development of electric cars in the world’s biggest automobile market,” the Journal added.

Through the NYSE listing, NIO is building its war chest to take on Tesla, which is arguably the world’s No 1 global electric-vehicle maker.

The Chinese carmaker is already demonstrating a strong cost advantage. In December 2017, NIO launched the NIO ES8, a seven-seater electric SUV, at about half the price of Tesla's Model X in China. The ES8 is NIO's first mass-produced model for the China market and has a base price of 448,000 yuan (US$65,000).

As of July 31, 2018, NIO delivered 481 ES8s and had unfulfilled reservations for more than 17,000 ES8s with deposits, of which 4,989 reservations were made with non-refundable deposits.

It plans to launch a second lower-priced, five-seater electric SUV, the ES6, by the first half of 2019.

Investors shouldn’t get the impression that NIO is just a cheap electric-car maker. It has higher aspirations. In 2016, NIO developed the EP9 supercar, a 1,360-horsepower speedster to challenge high-end sports cars with British racing driver Oliver Turvey and Italian racer Luca Filippi behind the wheel.

The intent with the supercar or concept racer was to check out the performance, assess the technology, and reuse a lot of that in NIO’s mass-market vehicles.

READ: Tesla may soon swing to a profit as Model 3 demand revs up

Corporate America first woke up to the Chinese presence when NIO founder William Li, dubbed the “Elon Musk of China,” managed to lure Silicon Valley innovator Padmasree Warrior from Cisco SystemsInc (NASDAQ: CSCO) two years ago to head up NIO in America and be global chief development officer. She has built NIO’s 85,000-square-foot R&D center in San Jose, California by hiring some of America’s top artificial intelligence, robotics and electric car experts.    

NIO now has research and design centers in Shanghai, London, Hong Kong, Munich and California.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

Quick facts: NIO Limited

Price: 13.42 USD

Market: NYSE
Market Cap: $15.9 billion

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