China's numerous green-car startups to dwindle to 2-3 in 5 years -Nio chairman

Jake Spring and Norihiko Shirouzu

SHANGHAI, April 20 (Reuters) - Of dozens of startup electric

car makers in China, only two or three will be around in five

years' time, the chief of Nio told Reuters on Thursday, after

the automaker unveiled its first production car aimed at taking

on Tesla Inc's Model X.

China's government has been promoting electric vehicles in

its battle with urban smog, with startups flooding the market

after it opened up the sector to investment from technology

firms and non-automotive backers.

"A car business is the world's toughest business to start,"

Chairman William Li said in Chinese on the sidelines of the

Shanghai auto show. "If you look in five years, there won't be

more than two or three companies reaching the minimum level of

sales needed."

Nio, formerly NextEV, has lined its coffers with big-name

investors, recently closing a second round of funding led by

tech firms Tencent Holdings Ltd and Baidu Inc

, Li said. He declined to state the size of investment

or the automaker's valuation.

The company now has nearly 40 investors, expanding its

backers from five or six early founding investors, he said.

Nio unveiled its first mass production car on Wednesday at

the Shanghai show - the ES8 pure-electric, seven-seat

sport-utility vehicle. The model is set to go on sale next year

with more features than the Tesla Model X at a lower price, Li


He said there is an opportunity for Nio to succeed by

focusing only on electric cars and offering better service and

digital functionality, areas where traditional car makers have


"Traditional car companies aren't seriously doing this," Li

said. "Their focus is still on hybrids and traditional cars."

(Reporting by Jake Spring and Norihiko Shirouzu; Editing by

Christopher Cushing)