While Tesla wants to get away from the public market, it seems that several EV startups are willing to take its place. We just reported on Electra Meccanica going public on the NASDAQ and now NIO is filing to follow them.
The startup is seeking to raise $1.8 billion in a US IPO to finance its ambitious electric vehicle plans.
As we previously reported, NIO is presenting itself as a global EV company, but it is very much based in China, where most of its operations are right now and the only market where its first vehicle is available: the NIO ES8, an all-electric SUV.
Last year, NIO claimed to have raised ‘up to $600 million’ in its latest financing round led by Baidu.
It added to the over $1 billion that the relatively young company claimed to have raised over the past few years, including significant investments from Chinese giant Tencent, which has also invested in Tesla.
But now the company is quickly running out of money.
According to their S1 filing to go public, they have lost over $700 million last year and they have already lost over $500 million this year:
They started delivering the NIO ES8 this year and have registered almost $7 million revenue, but as it is often the case in the early ramp-up of a mass-produced product, the vehicles are still made at a loss.
With only about $668 million left from their latest rounds of investments and at this pace of spending, NIO would run out of money by the end of the year.
That’s why they are turning to a US IPO to raise $1.8 billion.
In the SEC filing for the equity raise, NIO listed a 5-point strategy on how to use the money:
- Successfully launch future models such as the ES6 timely to target a broader customer base and expand our product lineup;
The ES6 is smaller electric SUV than ES8 that NIO is expected to soon launch at a lower price (~$30,000).
- Build our own manufacturing capacity and continue to optimize manufacturing costs by leveraging a common platform and production flexibility;
NIO currently doesn’t have a production license in China and it has partnered with JAC to produce the ES8.
- Expand our infrastructure and service coverage nationwide to improve user experience;
We recently reported on NIO’s ambitious infrastructure plans, which includes things like mobile charging stations inside electric vans, several electric car service centers, and battery swap stations.
The last two points are:
- Continue to focus on technological innovation; and
- Create more monetization opportunities during the lifetime ownership.
The IPO is being handled by Morgan Stanley, Goldman Sachs, and several other major banks. It is expected to soon start trading under the NIO symbol.
Here’s a letter from CEO Bin Li included in the SEC filing for the IPO:
LETTER FROM BIN LI
Dear Investors,
NIO, which translates to “Blue Sky Coming” in its Chinese name, originated from our vision of a future filled with blue skies. We believe that improved smart electric car technologies, coupled with better experience of car ownership, will drive increased appreciation and adoption of smart electric cars, leading to the fulfillment of our vision of blue skies and a more sustainable future for our planet.
NIO was founded at a time when the world has been experiencing what may be the most significant technological change in the more than 100 years’ of development of the automotive industry. Increasingly sophisticated technologies such as autonomous driving, electric car technology, artificial intelligence, and cloud services are reshaping the automotive industry. We believe that these innovative technologies will not only relieve drivers from the monotony of their daily commutes, but will also make cars safer and more environmentally friendly and transform the car into a mobile living space, ultimately becoming a broader part of a user’s lifestyle. We believe that technological advances will reignite enthusiasm and passion toward automobiles.
Witnessing this time of technological change in the automotive industry, NIO’s founding investors and management team decided to participate as a driving and leading force. As a global start-up, thousands of our colleagues in China, the U.S. and Europe have made great achievements over the past three years that we are very proud of. We were the title sponsor for the winning driver in the first Formula E season in 2015; our EP9 supercar broke the record as the fastest all-electric car at the Nürburgring Nordschleife “Green Hell” track in Germany in May 2017; we launched our first volume manufactured vehicle, a high-performance and intelligent electric SUV, the ES8, and are currently scaling up deliveries to users; and we have developed our NIO Pilot ADAS system and NOMI assistant, showcasing our application of the latest automated assisted driving and artificial intelligence technologies in mass-production cars. Our team is not only visionary in its technological development, but also has the ability to execute on our vision and turn it into reality through strong execution.
Product excellence is just the beginning for NIO. What users want is a holistic experience exceeding expectations. We expect that the ownership of cars will be redefined by a new experience with respect to cars, services, digital connections and the experience beyond the car. Technological advances will not only reshape automotive products, but also connect cars, smart devices, infrastructure, service providers and users, making a more efficient and innovative user experience possible. Making use of this architectural framework, NIO offers one-stop care-free services to users. NIO Power aspires to provide convenient electric charging services so that eventually users may enjoy a level of convenience similar to or better than fuel charging, and NIO Service is designed to free users from hassles related to insurance, repair, and general car usage. We provide outstanding in-car software and connectivity systems, and also connect cars, services and users with our NIO mobile application efficiently and cohesively. Our NIO Life offers distinct accessories and merchandise. We collaborate with Tencent to deliver a high quality in-car music streaming experience, and partner with JD.com for delivery services directly to and from our cars. Our objective is not just to provide care-free services, but more importantly to shape a joyful lifestyle with users.
Technological advances enable us to offer excellent products and services and also to streamline connections between us and users as well as among users. We aim to develop NIO into a community starting with cars and growing with our users. Through our NIO mobile application, hundreds of thousands of people are connecting with each other or sharing moments, while our NIO Houses offline have become an increasingly popular destination to gather and share for our users. Our innovative NIO Day, among other NIO events, was well received by our users. Through these interactive experiences, we are building trust and providing unique experiences to our users, and NIO, as a community, is gaining increasing vibrancy.
Our users’ passion and support has inspired me to think further about creating a deeper connection between NIO and our users. After long and careful consideration, I plan to transfer 50 million NIO shares beneficially owned by me, which account for approximately one third of all my beneficially owned NIO shares, to a trust at an appropriate time in the future. While I will retain the voting rights of the shares to be transferred to the trust, I will let NIO users discuss and propose how to use the economic benefits from these shares, through certain mechanisms to be implemented in the future. I believe this trust arrangement further advances NIO’s pursuit of our original aspiration of becoming a user enterprise and will also deepen our relationship with users. I also believe NIO users, shareholders, employees, and partners will all benefit from this arrangement in the long run.
To deliver superb products, an experience beyond expectations, and create a harmonious and vibrant community, we need good values to motivate and unite our teams around the world. In the early days of NIO, my colleagues from all over the world went through a series of discussions and came up with the following corporate values for our company:
Honesty: We value truthfulness, integrity and clarity in everything we do. This allows us to be open, be sincere and share our thoughts openly with our stakeholders.
Care: We are deeply passionate about what we do. We strive to build strong, natural relationships that last, and we want this spark to energize everyone around us, which enables us to enjoy our journey together. We care, listen, and share our thoughts because we treat each of our users as if the user were ourselves.
Vision: We go where others will not – fundamentally disrupting the industry with the aim of creating value for our users. We think big and visualize opportunities by embracing new ways of thinking, working and communicating.
Action: We are empowered to act – doing only what we believe in and building trust by executing on our vision. We move quickly and with purpose – actively anticipating the needs of our users and creating opportunities for our business.
Since our inception, these values have helped us overcome challenges in team integration, make more users trust us as a visionary and reliable friend, and earn the trust of our shareholders and full support from our partners. I believe these values will guide us throughout our growth path in the future.
The automobile has been one of the most important products in people’s lives for more than a century. As we look to the future, innovative technologies will bring to us better experiences, higher satisfaction and expanded possibilities. Despite potential challenges that we may face, I believe future cars will make the world a better place. It is an honor for NIO to participate in the automobile industry transformation. We look forward to driving onto this new journey with you.
Bin Li
Founder, Chairman and Chief Executive Officer
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