Japan’s SoftBank Group Corp. 9984 -0.61% is in talks to purchase a large chunk of shares in the upcoming initial public offering of Chinese electric-vehicle maker NIO, according to people familiar with the matter, a move that could help bolster a multibillion-dollar valuation for the startup.
Shanghai-based NIO, an emerging rival to Tesla Inc., TSLA -0.98% last December launched its first production car model—a seven-seater electric sport-utility vehicle—and has started taking customer orders for it. The company is working on a plan to list in New York in the second half of this year, people familiar with the discussions said.
SoftBank, which runs the nearly $100 billion SoftBank Vision Fund, could buy $200 million worth of shares in the IPO, one of the people said. NIO is hoping to raise between $2 billion and $3 billion from the stock sale, some of the people added. The talks with SoftBank are still ongoing and the plans could change, the people cautioned.
Representatives for SoftBank and NIO declined to comment.
NIO is planning to go public at a time of immense growth for the Chinese electric-vehicle industry. Sales of electric passenger cars in the country rose 72% to 578,000 last year, four times the number sold in the U.S. Chinese manufacturers have been supported by government subsidies and consumers are incentivized to buy electric vehicles, which produce less pollution.
NIO, founded in 2014 by Chinese entrepreneur William Li, was recently valued at $5 billion after it raised $1 billion in a November fundraising round led by Chinese internet giant Tencent Holdings Ltd. Its other investors include internet search firm Baidu Inc. and Chinese investment firms Hillhouse Capital Group and Hopu Investment Management Co.
Mr. Li is also NIO’s chairman, as well as the founder of Bitauto Holdings Ltd , a New York-listed internet marketing, content and transaction-services provider for China’s auto industry.
His company is one of dozens of Chinese electric-car startups that have launched in recent years, encouraged by the government’s support for the sector. NIO also has a base in Silicon Valley, where it has been developing autonomous-driving technology and other software.
When the company in December launched its fully-electric SUV, the NIO ES8, Mr. Li presented the vehicle as a lower-priced rival to Tesla’s popular Model X. NIO’s car responds to voice commands and can run around 220 miles on a fully-charged battery.
Xiaopeng Motors, a Chinese electric-vehicle manufacturer backed by e-commerce giant Alibaba Group Holding Ltd. , has separately announced plans to raise more than $1 billion in funds this yea—after raising $790 million so far.
Through its funds and subsidiaries, SoftBank has been making investments across the automotive supply chain, but has yet to invest in a car maker. It owns stakes in a Canadian lithium mine, chip architecture designer Arm Holdings and ride-hailing companies including Uber Technologies Inc. and Didi Chuxing Technology Co.
SoftBank’s acquisitive founder Masayoshi Son has previously said a key part of his strategy is unlocking synergies between portfolio companies.
Write to Julie Steinberg at julie.steinberg@wsj.com and Mayumi Negishi at mayumi.negishi@wsj.com