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Tesla's Newest Competitor

Written by Monica Savaglia
Posted August 20, 2018 at 8:00PM

Tesla could have some serious competition coming very soon. China has been a major leader in the electric vehicle (EV) market, and one Chinese company just filed for its initial public offering (IPO) on the New York Stock Exchange. This kind of competition could be detrimental to Tesla’s products and its performance in the EV market.

The Shanghai-based electric carmaker Nio Inc. filed for its initial public offering on August 13th. Nio’s Chinese name translates to “Blue Sky Coming,” inspired by the company’s vision of a future filled with blue skies. It is committed to assisting in creating a more sustainable future for the planet.

Nio wants to improve smart electric car technologies by giving users a better experience when it comes to car ownership. The technology market is experiencing some of the greatest innovations of its time. Technologies are getting smarter and more sophisticated. We have technologies like autonomous driving, electric car technology, artificial intelligence, and cloud services.

And all of those technologies are improving and reshaping the automotive industry into something it has never been before. Cars are becoming a lot more than just something to take us from point A to point B. Nio wants to take advantage those new technologies and incorporate them into its electric vehicles to enhance car ownership into something more appealing than burdensome.

I can relate to that mindset very much. Right now, I’m in the market for a new vehicle. It’s been about seven years since I bought my current car, and I’m very much in need of an upgrade. There are so many features and options for new vehicles nowadays that I do feel like I’m getting my money’s worth instead of contemplating if a new car purchase is really worth it.

These new technologies aren't just for appearance’s sake, but instead they have the potential to give drivers a safer and more environmentally friendly driving experience, while at the same time relieving drivers of the monotony of daily commutes. Driving and being in the car (and traffic) is exhausting, so if your experience in your vehicle were more pleasant, it would make your work commute a lot more bearable.

Tesla Could Have Some Strong Competition

Nio was founded in 2014, and it quickly became a staple in the EV market. The company designed and produced a batch of all-electric supercars that it called the EP9. The EP9 has broken both EV and non-EV production car records.

Nio’s first production car made its debut in December 2017 — it’s a seven-passenger SUV called the ES8. The SUV went into production in spring of this year and costs half of what a Tesla Model X costs in the country. The company started shipping the ES8 to customers in June.

Nio is pushing hard to get these cars out and make a global impact. The company has even begun developing a smaller five-passenger SUV called the ES6 to come out in 2019.

Nio’s IPO comes at time when Tesla’s CEO, Elon Musk, said his company may be able to produce an electric car for $25,000, but it would take three years to get the company to that point.

Sam Abuelsamid, a senior researcher at Navigant Research, said:

U.S. investors are more interested in an EV startup like this that ultimately has global aspirations, especially based on the love they’ve shown to Tesla. There’s interest in a nontraditional car company that is looking beyond just building and selling cars, but looking on the overall digital ecosystem around the car as well, and being seen as more of a tech company.

People are intrigued by electric vehicles, and they’re especially intrigued by Tesla. Everyone has been waiting and watching Tesla roll out its latest vehicles.

Successful mainstream electric vehicles are brand-new to the automotive industry. People love to be part of a revolution, and that’s exactly what’s happening as more and more electric vehicles startups pop up and gain traction.

Nio Is Creating Huge EV Opportunities

There are already 500 EV startups in China, and that number is about to grow. Nio is using its U.S. IPO as a way to grow globally to set itself apart from these other EV startups. A U.S. IPO also helps the company to be seen as transparent — that it has nothing to lose and is ready to be open to the public with all of its strengths and possible weaknesses.

Nio has the potential to give U.S.-based Tesla a run for its money as it becomes a publicly traded company on the New York Stock Exchange. As a public company, Nio will be creating a brand for itself in the U.S., which would give the company an opportunity to take market share away from Tesla.

This comes at a time when Tesla’s CEO Elon Musk continues to create headlines for himself and the company about how hard he’s been working to keep all the promises he’s made to consumers.

Nio is expecting to earn $1.8 billion from its U.S. IPO. IPO proceeds this large could open up a lot of opportunities for the company in both the U.S. and China EV markets.

If you want to stay alert on Nio’s and other groundbreaking IPOs, subscribe to IPO Authority, where you’ll get up-to-date information on hot companies that are about to start publicly trading.

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Until next time,

Monica Savaglia

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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