China EV maker Li Auto pursues US listing

Xiang Li, the company's founder holds 25.1% stake and enjoys majority voting power by virtue of the dual-class share structure. Meituan Dianping has 14.5%, while its founder, Xing Wang, owns 8.9%, according to a prospectus. The size and pricing of the offering have yet to be established.

According to AVCJ Research's records, Li Auto - previously known as Chehejia or CHJ Automotive - raised an undisclosed angel round from Future Capital and Plum Ventures in 2015. Leo Group, a Shenzhen-listed machinery maker, led a RMB780 million ($120 million) Series A in 2016. The round also featured China Renaissance, Source Code Capital, among others.

This was followed by a RMB3 billion Series B in 2018 led by Matrix Partners China and Shougang Fund, an investment firm backed by state-owned steel producer Shougang Corporation. Wang then took the lead in a $530 million Series C in 2019, with the likes of ByteDance Technology also taking part. Wang invested another $500 million in a Series D round last month.

Li is a serial entrepreneur who previously set up Pcpop.com and US-listed Autohome.com. He also co-founded Nio, the first Chinese electric car manufacturer to list in the US. Li departed Nio in 2015 to launch its own EV brand, Li Auto.

However, the company made a strategic error in launching a two-wheeler as its first vehicle, which failed to get much traction. An SUV project followed in 2016 and entered mass-production in November 2019. Although a latecomer in the market, Li Auto had delivered more than 10,400 vehicles as of June, with an average selling price of RMB328,000.

The company claims to be the first in China to commercialize extended-range electric vehicles (EREVs). An EREV is driven by electric motors, but its power comes from both a battery pack and a range-extension system that relies on an internal combustion engine and an electric generator. The vehicle has a range of 800 kilometers, much longer than the pure electric cars. If there are no charging piles nearby, the vehicle can take traditional fuel.

Li Auto recorded revenue of RMB284.3 million in 2019, up from zero the previous year because it wasn't in production. The net loss widened from RMB1.5 billion to RMB2.4 billion. For the first three months of 2020, revenue came to RMB851 million and the net loss was RMB77.1 million, down from RMB358.4 million in the same period of last year.

China has become the world's largest new energy vehicle (NEV) market. According to the CIC Report, a consulting firm, NEV sales volume rose from 300,000 units in 2016 to 1.1 million units in 2019. Sales are expected to reach 4.1 million by 2024.

The sector has attracted strong interest from private equity and strategic investors. There are several well-funded start-ups, including Nio, Xpeng Motors, and WM Motor Technology.

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• Topics
• Greater China
• Technology
• Industrials
• IPO
• automobiles
• Meituan-Dianping
• China