Japan’s SoftBank Group Corp., which was in talks earlier this year to take a stake in Chinese electric-vehicle maker NIO Inc., has decided not to invest in the Shanghai-based startup’s initial public offering, according to people familiar with the matter.

SoftBank had considered buying about $200 million worth of shares in NIO’s IPO, The Wall Street Journal reported in April. It couldn’t be learned why the Japanese tech giant walked away from the potential investment. One of the people said SoftBank is actively looking at...