Meituan Dianping-Backed Chinese EV Maker Li Auto Targets $100M US Listing on July 31

(Source: Li Auto)

Chinese electric vehicle maker Li Auto has filed for a U.S. initial public offering, aiming to list its shares on the Nasdaq Global Market on July 31 under the symbol “LI”, according to Chinese business media outlet IPO Zaozhidao on Monday. The move, which was first announced by the company on July 10, came as the shares of its rivals Tesla and Nio have surged since June.

The Beijing-based company has sought to raise up to $100 million for the offering without listing the price range for the shares in its prospectus. The net proceeds it expects to receive from the offering will be used for the research and development (R&D) of new products and manufacturing facilities, as well as for general corporate purposes and working capital, the company said in its filing.

Formerly known as CHJ Automotive and founded in 2015, Li Auto recently closed its Series D financing round of $550 million led by Inspire Elite Investments Limited, a wholly owned subsidiary of China’s food delivery platform Meituan-Dianping. The company completed this round of funding only ten days ahead of the IPO filing.

Li Auto started the volume production of its first market vehicle model Li ONE in November 2019. The extended-range electric sport-utility vehicle allows drivers to power their cars with either electricity or gasoline. As of June 30, the company has delivered a total of 10,473 models, including 6,604 in the second quarter of 2020.

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However, the five-year-old company has been reporting negative net cash flows, and has not been profitable since its inception. It reached a total revenue of $40 million in 2019 and a recording revenue of $120 million in the first quarter of 2020. The company has been burning through cash with around $344.4 million in net loss over the past year, and the losses in Q1 2020 was narrowed to $10.9 million. The company also estimates that its capital expenditures for the next three years will be approximately $1.5 billion, which are expected to be financed through net proceeds from the upcoming public trading.

Given that the company has to depend on revenues generated from the sole offering model Li ONE in the foreseeable future, Li Auto said they will introduce a full-size premium extended-range electric SUV in 2022.

“The pressure on us to generate positive cash flow may be further exacerbated by our contractual obligations, including capital commitments, operating lease commitments, finance leases, borrowings and debts,” it said in its filing. “We expect to continue to invest in the production ramp-up of Li ONE, expansion of the Changzhou manufacturing facility, and R&D to further expand our business. These investments may not result in revenue increase or positive net cash flow on a timely basis, or at all.”

Li Xiang, the company’s CEO and founder, currently holds a 25.1% stake in the company, followed by Meituan-Dianping’s CEO Wang Xing with 23.5%, who has been Li’s strongest backer since August 2019 when he led a $530 million Series C funding.

If the IPO proceeds, Li Auto would become the second Chinese EV start-up to list in New York after NIO’s $1 billion IPO on Wall Street in September 2018. The company’s stock has gained nearly 180% since the beginning of June as its backer Tencent has boosted its stake in the company to 15.1%.