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Chinese Automaker Li Auto Files for a U.S. IPO

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【Summary】Chinese electric vehicle startup Lixiang Automotive Inc. (Li Auto) has filed for a U.S. initial public offering (IPO). In a filing with the U.S. Securities and Exchange Commission, the company said it intends to list its shares on the Nasdaq under the symbol “LI.” Li Auto is hoping to take advantage of the strong interest in electric vehicles from investors.

Eric Walz    Jul 13, 2020 12:45 PM PT
Chinese Automaker Li Auto Files for a U.S. IPO
The Li One SUV has a battery pack that can be charged by a small gas engine & generator or a conventional EV charger.

Chinese electric vehicle startup Lixiang Automotive Inc. (Li Auto) has filed for a U.S. initial public offering (IPO). In a filing with the U.S. Securities and Exchange Commission, Li Auto said it intends to list its shares on the Nasdaq under the symbol "LI." 

Goldman Sachs was selected as the underwriter of the lead transaction.

Li Auto is hoping to take advantage of the strong interest in electric vehicles from investors. The company is following in the footsteps of rival EV startup NIO, which launched on the New York Stock Exchange (NYSE) under the symbol "NIO" on September 12, 2018.

Li Auto's filing, which was announced on Friday, comes as share prices Nio have surged in recent months. Nio stock hit an all-time high of $14.98 on Friday after it secured new lines of credit totaling RMB 10.4 billion. Nio's stock price was at an all-time low of $1.39 on October 1, 2019 as sales of electric vehicles slowed in China. However the stock has rebounded on rising demand for NIO's EVs in China, as did the shares of electric automaker Tesla, which are also at record highs as well.

Reuters first reported earlier this year that Li Auto planned to apply for an IPO in the United States, saying at the time the company automaker has been preparing for its U.S. IPO since the summer of 2019. 

Li Auto was founded in 2015 and was formerly known as CHJ Automotive. The company's sole offering is the Li ONE extended-range electric SUV. Volume production of the Li One began in Nov 2019 at the company's factory in Changzhou.

While most of Li Auto's rivals including Nio and Tesla are building fully-electric vehicles, the Li ONE allows drivers to charge the battery with electricity or gas. The company cites limited access to EV charging infrastructure in China as one reason for building the Li ONE with an smaller internal combustion engine that's used to generate electricity to charge the vehicle's battery, but it also helps to extend the overall range.

Li Auto calls the design "EREV (extended range EV) technology."

Although the Li ONE is purely electric-driven by its electric motors, the energy source to power the electric motors come from both its battery pack and range extension system that includes a dedicated, 1.2 liter turbo-charged internal combustion gas engine (ICE) and a 100-kW electric generator. A component called a speed reducer used to connect the two power plants together. 

The electric propulsion portion of the Li ONE consists of a 140-kilowatt rear-drive electric motor, a 100-kilowatt front-drive electric motor, and a 40.5-kilowatt-hour battery pack, which offers an all-electric NEDC range of 180 kilometers (112 miles). The SUV also includes a 11.9 gallon fuel tank for the dedicated ICE. 

Li Auto says its Li ONE SUV offers the same driving range as fully-electric EVs of a similar class. 

With this setup, the Li ONE delivers a NEDC range of 800 kilometers (497 miles), acceleration from zero to 62 mph in 6.5 seconds, and energy efficiency of 6.8 liters per 100 kilometers or 20.2 kilowatt-hours per 100 kilometers, depending on its driving mode, the company wrote in its IPO filing. 

The Li ONE's battery accepts standard charging, DC fast charging, and standard refueling. Since the gas engine provides power to the electric motor, the Li ONE can operate even when customers have no access to charging infrastructure, which Li Auto says many Chinese EV drivers don't currently have convenient access to.

The Li ONE also requires much less battery capacity for the vehicle's size, which makes the vehicle more affordable the company says. Lithium-ion batteries for EVs add significant cost to the price of the vehicle. 

The average cost of an EV battery was approximately US$166 for each kilowatt-hour in 2019. With new battery technologies being developed, automakers are working to bring this number to $100 per kilowatt-hour, which will make EVs cost around the same as gas powered models.

Li Auto also says that using a smaller battery pack contributes to a more cost-efficient body structure design, which results in less usage of costly aluminum parts for the vehicle body and suspension system. 

As a result, the cost of Li ONE is close to that of an ICE vehicle and much lower than that of a fully electric SUV, such as the Tesla Model X. The MSRP of the Li ONE is RMB328,000 (US$46,875).

Li ONE customers can also benefit from tax breaks in China and local government policies in favor of  New Energy Vehicles (NEVs), such as low cost vehicle registrations. NEVs include both fully-electric and hybrid models.

The company believes its EREV technology will help accelerate the adoption of electric vehicles in China by offering a more affordable EV with a range comparable to a gas-powered vehicle.

As of June 30, 2020, the company delivered 10,473 Li ONE SUVs, including 6,604 in the second quarter ending on June 30, 2020.

Li Auto employs over 700 sales and service personnel across 21 retail showrooms, 18 delivery centers, and 17 servicing centers nationwide. The company aims to open another 40 showrooms by the end of this year.

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