Nio to Kick Off Mass Production This Week Amid Rumored Stateside IPO

Li Suwan & Yang Haiyan

(Yicai Global) May 30 — Electric car startup Nio plans to begin mass production this week amid rising speculation that the Tencent Holdings-backed manufacturer has filed to go public in the United States.

The Shanghai-based company plans to have made 10,000 vehicles by the end of this year, its President Qin Lihong told Yicai Global. It builds its cars at a shared plant with state-owned JAC Motors, which can produce at most 100,000 units a year, but is planning its own factory in Jiading district, Shanghai, to meet anticipated demand.

Nio had originally planned to start mass production in the first quarter in order to make deliveries by the end of the first quarter, but strict quality criteria has pushed that back, Qin said. He expects cars to be delivered soon into the second half.

The firm will be keen to press on with mass production if speculation surrounding its initial public offering proves true. One source told Yicai Global that Nio plans to list in the States in September this year and has signed exclusive underwriting agreements with eight investment banks, including Merrill Lynch, Morgan Stanley, Goldman Sachs and Citibank, but Nio executives refused to comment when contacted by Yicai Global.

It seems unlikely that Nio would need to sign exclusive deals with eight banks, another insider added. If it is true, it is merely an obstacle to make listing harder for competitors, he said. Two of Nio’s rivals, WM Motor Technology and Xpeng Motors, also have plans to go public, but have not yet made any real moves toward listing.

Foreign media outlets have also reported the potential IPO. Bloomberg cited sources close to the matter as saying Nio had submitted an initial confidential filing with the US Securities and Exchange Commission, and could be set to raise around USD2 billion.

Offering an Experience

Nio already has five showrooms across China. Yicai Global visited its Shanghai center and noticed that only around 20 percent of the so-called Nio House was used for displaying vehicles, the remainder is based around experiences and social contact.

“I think the word ‘channel’ is out of date,” Qin said. There was previously greater distance between products and consumers and retailers emphasized channels a lot, he added, saying the internet has negated this distance.

Consumers can learn about Nio cars, order them and pay for them through the company’s app, they can also use it to track the entire process from manufacturing right through to delivery, Qin added.

Nio Houses therefore attach more importance to user experience, and the firm will be speeding up construction of more of them this year, he said.

Editor: James Boynton