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In Tesla's shadow, China's NIO raises US$1b from IPO: sources

Prices at US$6.26 a share versus target range of US$6.25-US$8.25; deal values startup at US$6.41b

NIO, backed by Chinese tech giant Tencent Holdings Ltd, plans to use the IPO proceeds for R&D of products and technology, marketing and developing manufacturing facilities.

Hong Kong

CHINESE electric vehicle startup NIO Inc priced its shares near the bottom of its targeted price range in its US initial public offering (IPO), according to sources familiar with the matter, dragged down by investor concerns about the prospects of chief competitor Tesla Inc.

Tesla's struggle to meet its production targets and an abandoned attempt by chief executive Elon Musk to take it private have weighed not just on its own stock, but also on peers looking to develop mass-market electric cars.

Chinese electric carmakers are seeking capital to develop autonomous driving and battery technologies. Beijing wants to rapidly expand China's production to curb vehicle emissions, boost energy security and promote high-tech industries.

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NIO priced its shares at US$6.26, just above the low end of its US$6.25 to US$8.25 target price range, according to four sources familiar with the process. The deal will value the firm at US$6.41 billion.

It is due to begin trading on Wednesday on the New York Stock Exchange under the symbol "NIO".

Earlier, one source told Reuters the deal would price at US$6.25 a share.

A representative for NIO did not immediately respond to a request for comment.

NIO, founded by Chinese entrepreneur William Li in 2014, sold US$1 billion in shares in the IPO, making it the third-biggest US listing by a Chinese firm this year.

At the start of the IPO process, NIO had hoped for a valuation of as much as US$20 billion, according to one person familiar with the company's plans.

The IPO comes as China-US trade tensions involving tit-for-tat tariffs have knocked back global stock markets.

NIO, backed by Chinese tech giant Tencent Holdings Ltd, plans to use the IPO proceeds for research and development of products and technology, marketing and developing manufacturing facilities.

Its other backers include investment firms Hillhouse Capital Group, Sequoia Capital and a private equity fund established by Baidu Inc.

NIO incurred a net loss of US$502.6 million in the first six months of 2018 on US$6.95 million in revenues.

In June, it began customer deliveries of its ES8 pure-electric, seven-seat sport-utility vehicle, which the company sees as a rival to Tesla's Model X.

NIO said in its listing prospectus that as of the end of August, it had delivered about 1,600 ES8s and had another 15,778 unfulfilled reservations for the vehicle.

It also plans to launch a second, lower-priced electric sport-utility vehicle, the ES6, by the end of this year.

Startup electric carmakers such as WM Motor Technology Co and Xpeng Motors have also raised billions of dollars from heavyweight investors including Alibaba Group Holding Ltd, Baidu and Tencent.

Goldman Sachs, JPMorgan and Morgan Stanley led NIO's IPO.

Also involved were Bank of America Merrill Lynch, Credit Suisse, Citigroup, Deutsche Bank and UBS. REUTERS