People inspect one of Chinese electric vehicle start-up Nio's SUVs in Shanghai, China. Picture: REUTERS
People inspect one of Chinese electric vehicle start-up Nio's SUVs in Shanghai, China. Picture: REUTERS

Singapore — NIO, the electric-vehicle (EV) maker backed by technology giant Tencent Holdings, of which Naspers owns just more than 30%, filed for a $1.8bn initial public offering (IPO), becoming the first Chinese car maker to seek a listing in the US as it gears up to compete with the likes of Tesla.

The company applied to list its American depositary shares on the New York Stock Exchange under the symbol NIO, and the $1.8bn registration amount is a placeholder to calculate filing fees.

NIO and other Chinese EV makers are raising money to develop new products and fund an expansion as the world’s biggest vehicle market signals a shift to battery-powered vehicles in a bid to cut pollution and reduce dependence on imported oil. This technology drive has spawned a clutch of startups from China, all wanting to take on legacy vehicle akers and Tesla, whose owner Elon Musk is considering taking the company private.

The IPO is being led by Morgan Stanley, Goldman Sachs, JP Morgan Chase, Bank of America, Deutsche Bank, Citigroup, Credit Suisse and UBS Group.

Tesla in China

The Chinese company’s move to sell shares in the US comes at a time when Musk is busy setting up a gigafactory in Shanghai to tap a market where the government is promoting new-energy vehicles with incentives to buyers. The billionaire has said he plans to take the money-losing company private at $420 a share, valuing Tesla at $82bn.

NIO, founded by William Li and a group of other internet entrepreneurs, started selling its first vehicle, the ES8 SUV, in December, three years after the company was founded. The vehicle comes with a price tag of 448,000 yuan ($65,000) before incentives.

NIO, formerly known as NextEV, is among several startups to have sprouted up in China after the introduction of incentives. In January, Byton, a Nanjing-based company started by former BMW executives, became the first Chinese vehicle omaker to hold a large-scale unveiling at the Consumer Electronics Show in Las Vegas. Others, such as WM Motor Technology and XPeng Motors, backed by funding from Alibaba Group, are also developing new models.

NIO’s founder Li, also known as Li Bin, said he plans to transfer 50-million shares, accounting for about one third of shares he owns in the company, to a trust at an "appropriate time in the future", he said in a letter in a filing to the US Securities and Exchange Commission (SEC). Li will retain voting rights to the stock while NIO users will discuss and propose how to use "economic benefits from these shares, through certain mechanisms to be implemented in the future", he said.

The EV maker counts Baillie Gifford and Hillhouse Capital among its investors. NIO is sufficiently funded for its operations and mass-production plans, Li said earlier this year.

Bloomberg