China is by far the world’s largest EV market – nearly 373,000 plug-in passenger cars were sold there in the first half of this year (according to EV Volumes). It’s widely believed that Chinese automakers hope to ride the electrification wave to the top of the global industry, but so far the only Chinese company selling substantial numbers of EVs in the US is BYD, which builds electric buses in California.
Although it hasn’t announced any firm plans to sell vehicles outside of China, NIO is a company to watch. The Shanghai-based EV-maker launched an IPO on the New York Stock Exchange this week, raising around $1 billion. The company was forced to scale back the size of its IPO, and the proceeds were short of the $1.8 billion boosters were hoping for. CFO Louis Hsieh told CNN on Wednesday that the timing “was not excellent,” pointing to bear markets for stocks in Hong Kong and Shanghai.
After a lackluster first day of trading, NIO shares posted impressive gains on the second day, and are still well into positive territory at this writing.
The company, which was founded four years ago, has wealthy backers, including Chinese tech companies Tencent and Baidu. NIO’s ES8 electric SUV, which was unveiled last year, sells for about $65,000 in China. According to a regulatory filing, NIO had delivered fewer than 500 vehicles in July, but claimed to have orders for 17,000. In the first half of this year, it recorded $7 million in sales, and posted a loss of $503 million.
Naturally, auto analysts are skeptical. Robin Zhu, an Asian auto industry expert at research firm Bernstein, said he’s intrigued but unconvinced. Bernstein foresees manufacturing challenges, a need for more capital in the next year or two, and ongoing losses through 2025.
“Longer term, we question whether the premium EV segment will be big enough to support NIO’s volume ambitions,” Bernstein analysts wrote. NIO, which plans to have 12 store locations by the end of this year, “will only be selling to a small part of the Chinese market,” due to the concentration of EV demand in the country’s largest cities.