Chinese electric car maker Nio just made its market debut on the New York Stock Exchange this month.
The company, which has been around for just four years, is already throwing heat at U.S. electric vehicle maker Tesla.
According to Nio’s Chief Financial Officer, Louis Hsieh, Nio is the only premium electric vehicle in China besides Tesla. He also noted that Nio’s seven-seat SUV is a better product at a cheaper price than the Tesla Model X.
“They’ve got the first mover advantage,” said Tu Le, founder of consulting firm Sino Auto Insights. “This is the first Chinese company that wants to be the Tesla killer.”
The company raised $1 billion from the offering, coming in short of the $1.8 billion target Nio had set. The stock was priced at $6.26 per share, just one penny over the bottom of the range Nio was hoping to see.
Nio’s offering was led by banks that include Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. All have an option to buy 24 million additional shares to cover over-allotments.
According to Hsieh, the IPO market is tough, partly due to U.S.-China trade tensions. He said that losses in Asian markets had made domestic investors “too jittery.”
Hsieh has also said that Nio has plans to expand into Europe and the United States. “We’re telling investors the opportunity in front of Nio is huge,” he said. “China is 60 percent of the global market and growing even this year 80 percent a year even though the auto market is down.”
The company has had wealth investors in China such as Tencent (TCEHY) and Baidu (BIDU).
At the end of July, Nio had 17,000 vehicles on order from customers, but had delivered fewer than 500, according to a regulatory filing for its IPO. In the first half of 2018, it recorded just $7 million in sales, posting a loss of $503 million.
While Nio has confidence in its abilities, some analysts are skeptical. Robin Zhu, an Asian auto industry expert at investment research firm Bernstein, has rated the stock “underperform.”
According to Zhu, the company will struggle to meet its ambitious sales targets and is selling its cars too cheaply to make sufficient profit. “We’re unconvinced Nio’s shares represent a sound investment,” he wrote.