{"id":860,"date":"2018-08-16T09:02:29","date_gmt":"2018-08-16T09:02:29","guid":{"rendered":"https:\/\/www.antya.ca\/research\/nio-inc-nio-for-the-braveheart-and-tesla-for-the-warrior-in-you\/"},"modified":"2026-02-17T06:27:31","modified_gmt":"2026-02-17T06:27:31","slug":"nio-inc-nio-for-the-braveheart-and-tesla-for-the-warrior-in-you","status":"publish","type":"post","link":"https:\/\/www.antya.ca\/research\/nio-inc-nio-for-the-braveheart-and-tesla-for-the-warrior-in-you\/","title":{"rendered":"NIO Inc. \u2013 NIO for the Braveheart and Tesla for the Warrior in You"},"content":{"rendered":"
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Sentiment on China and the news on Tesla are a definite no-no when it comes to subscribing to NIO\u2019s IPO. Financial statements are unlikely to be of benefit when considering an investment in NIO because not only are they backwards-looking, but also bereft of optimistic forecasts. NIO is a venture investment, just as Tesla was in 2010, with one crucial caveat. China is growing gangbusters, adopting leading-edge technology like there is no tomorrow, its denizens are willing to support homegrown technology and the environment challenge in China is a clear and present danger. That makes NIO and intriguing investment for Bravehearts.<\/p>\n<\/div><\/div>\n<\/div>\n

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NIO Inc. (\u201cNIO\u201d, or the \u201cCompany\u201d) intends to raise US$1.8 billion from prospective investors in the United States to execute on its vision of becoming a meaningful player in the Chinese Battery Electric Vehicle (\u201cBEV\u201d) marketplace. NIO\u2019s plan is to focus on the all-electric mid-range SUV segment, 5-seater, and 7-seater, where it will be positioned as the only Chinese Company that domestically manufactures the SUV. NIO believes domestic production will provide it with unique cost advantages relative to others, such as Tesla Inc. (\u201cTesla\u201d) that currently import vehicles into the country. Imports must contend with a customs duty of 15%, and recently imposed punitive tariffs of 25%, on auto imports from America.<\/p>\n

Whatever be the merits of NIO\u2019s business plan, let\u2019s first provide some context to NIO\u2019s status as an enterprise compared to Tesla that went public in early 2010.<\/p>\n

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  1. Prior to filing its registration statement, Tesla sold 937 Tesla Roadsters to customers in 18 countries, with more than 3.0 million miles under the Roadsters belt. As per NIO, it has sold 481 ES8 BEV in China. No details on miles driven were provided by NIO.<\/li>\n<\/ol>\n
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    1. Included in the 937 Roadsters sold, were second-generation units called Roadster 2 as well. i.e. prior to its IPO, Tesla had already upgraded its product once. No such details are available from NIO.<\/li>\n<\/ol>\n
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      1. Tesla was working on Model S at the time of its IPO. Model S was a generational leap in technology, sophistication, and customer acceptance and went head-to-head with global automotive icons like Daimler-Benz, BMW, VW, Lexus, etc., and emerged a winner. NIO has plans of introducing a smaller variant of ES8 called ES6, sometimes in 2019. Tesla was behind schedule with its Roadster, and Model S. NIO\u2019s is still a developing stage enterprise and it could also be late.<\/li>\n<\/ol>\n
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        1. Tesla had 10 corporate stores in the United States and Europe prior to its IPO, with plans for 20 stores by the end of 2010 after the IPO. NIO has not provided a figure for its store count.<\/li>\n<\/ol>\n
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          1. NIO employs 6,231 personnel in China, California, Munich, and United Kingdom. 87% of the employees are in China with only 600 in software design. Rest are sales, marketing, manufacturing, etc. The majority of high-value employees in design, research, software for autonomy, and other essential areas are based offshore. Tesla employed 514 individuals at the time of its IPO.<\/li>\n<\/ol>\n
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            1. The Tesla Roadster used over 2,000 purchased parts, sourced from over 150 suppliers. The supply base was global with about 30% of suppliers in North America, 40% in Europe, and 30% in Asia. The ES8 uses over 1,700 purchased parts which are sourced from over 160 suppliers. Both Tesla and NIO were dependent on components that were\/are single-source. NIO expects it to be similar for the ES6.<\/li>\n<\/ol>\n
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              1. Two years prior to the IPO, auditors identified a weakness in internal controls that was rectified by Tesla in 2008. Auditors at NIO have identified \u201ca material weakness in internal control over financial reporting\u201d. Currently, NIO is undertaking steps to rectify this weakness and the weakness could persist for another year.<\/li>\n<\/ol>\n
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                1. Both Tesla and NIO benefit from government subsidies for green vehicles, although in Tesla\u2019s instance once it reaches a cumulative unit sale of 250,000 cars, those subsidies will begin to decline or be eliminated sometimes in 2018.<\/li>\n<\/ol>\n
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                  1. Tesla outlined a positive gross margin for the nine-month period ended September 30, 2009, of $7.75 million based on revenue recognition of 706 Tesla Roadsters in its IPO filing. In its registration statement, NIO described a loss at the gross margin level of $23.5 million based on recognizing revenue from the sale of 481 ES8 vehicles.<\/li>\n<\/ol>\n
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                    1. As of June 30, 2010, the first quarter ended after the IPO, Tesla had an enterprise value of approximately US$2 billion comprising $1.7 billion in common equity, and the rest in preferred stock (Capital IQ). Based on the most recent equity capital raise, NIO enterprise value is approximately US$ 4.6 billion.<\/li>\n<\/ol>\n

                      What is in Favour of NIO compared to Tesla at its IPO?<\/strong><\/p>\n