China's Li Auto gains 43% on debut after $1.1b US IPO

The company sold 95 million American depositary shares (ADS) at $11.50 apiece, above the indicated range of $8-10 per share. The stock opened at $15.50 on July 30 and peaked at $17.50 before falling back to close at $16.46.

Concurrent to the offering, four existing shareholders agreed to purchase $380 million worth of shares through a private placement. Chinese online-to-offline services giant Meituan-Dianping contributed $300 million, while Meituan-Dianping founder Xing Wang and ByteDance Technology each put in $30 million, according to a filing.

Li Auto is the second Chinese EV maker to list in US, following Nio's $1 billion offering in 2018. Nio sold shares at $6.26 apiece, but its stock sank to $1.50 last year due to liquidity issues. However, after securing a bailout from the Hefei provincial government - and agreeing to relocate operations to Hefei - Nio's stock recently peaked at $14.98. 

There are several other well-funded Chinese EV start-ups, including Xpeng Motors and WM Motor Technology. Xpeng is reported to be targeting a Hong Kong IPO. The company declined to comment.

Li Auto is named after Xiang Li, its founder. It was previously known as Chehejia or CHJ Automotive. Li is a serial entrepreneur who previously set up Pcpop.com and US-listed Autohome. He also co-founded Nio, leaving in 2015 to launch his own EV brand.

However, Li Auto 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. Though 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) - hybrid cars driven by electric motors. 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.

AVCJ Research’s records show that Li Auto raised an angel round from Future Capital and Plum Ventures in 2015. Leo Group, a Shenzhen-listed machinery maker, then 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 also taking part. Wang invested another $500 million in a Series D round earlier this year.

Li owns 21.3% of the company and holds a majority voting interest. Wang has a 23.3% stake.

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.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• IPO
• Consumer
• Technology
• Bank of China
• automobiles
• Meituan-Dianping
• Cleantech
• Matrix Partners