China's Li Auto announces IPO price

Beijing (Gasgoo)- Chinese premium smart electric vehicle maker Li Auto Inc. today announced it priced 95 million American depositary shares (“ADSs”) at US$11.5 per ADS, more than the high end of its estimated offering price range (between US$8.00 and US$10.00). Each ADS represents two Class A ordinary shares of the Company. 

The ADSs are expected to begin trading today on the Nasdaq under the symbol “LI”. The offering is expected to close on August 3, 2020, subject to customary closing conditions. If the underwriters do not exercise their option to purchase additional ADSs, the company will raise a total of US$1.47 billion via the offering and the concurrent private placements.

An innovator

The company was named Beijing CHJ Information Technology Co., Ltd., or Beijing CHJ when it was founded and started operations in April 2015. Later, the name was changed to Leading Ideal Inc. in April 2019 before it was changed to Li Auto Inc. in July 2020.

One year after its foundation, it began to build its own manufacturing facility in Changzhou, Jiangsu Province, with a designed annual capacity of 500,000 vehicles. In October of 2018, the LEADING IDEAL ONE (Li ONE), the first model under the all-new intelligent EV brand LEADING IDEAL made its official debut. At the end of the same year,the company obtained NEV production license through an acquisition, making it qualified to produce its own vehicles. In November 2019, the volume production of Li ONE started.

As an innovator in China's NEV market, Li Auto takes a different roadmap from other players. That is extended-range electric vehicles, or EREV, which it thinks is the most efficient solution to address current challenges facing domestic market. An EREV is purely electric-driven by its electric motors, but both its battery pack and range extension system can supply energy source and power. A range extension system generates electricity with a dedicated ICE designed with high fuel consumption efficiency, an electric generator, and a speed reducer to connect them.

From the beginning of its establishment, the company has been able to attract or retain qualified or highly skilled employees from such fields as auto, internet and electronic technology industries. By the end of 2019, Li has a total of 2,628 employees, 1,005 of which are engaging in research and development, including over 390 for smart technology development.

Li ONE

Dedicated to serving the mobility needs of families, Li makes the SUV segment as its strategic focus. Currently, the company only has one model for sale, namely Li ONE, a six-seat, large premium electric SUV.

The model is equipped with a range extension system and cutting-edge smart vehicle solutions. Li ONE has an NEDC range of 800 kilometers. Its 40.5-kilowatt hour lithium-ion battery pack is capable of supporting a purely electrically powered range of 180 kilometers. Its long range can help to eliminate the range concern of most potential EV buyers.

In slow charging mode, it takes about six hours for a full charge with a seven-kilowatt charger while in fast charging, it only needs 30 minutes to increase the displayed state of charge from 20% to 80% with a 60-kilowatt charger, and refueling.

Besides, the SUV boasts various technology features, such as four-display interactive system with advanced navigation and entertainment applications, full-coverage in-car voice control system, remote mobile control, ADAS, and FOTA upgrades, as well as kinds of active safety functions like automatic emergency braking, lane departure warning, and side view assist.

After its delivery started at the end of 2019, it just took the company six and a half months to achieve the first 10,000 delivery milestone, the fastest among all startups across the world. In the second quarter of this year, the delivery amounts to 6,604 units.

To be a leader

Li Auto excels in capital efficiency. According to the updated prospectus, the company recorded revenues of RMB1.9 billion (US$275.0 million) for the second quarter of 2020, up by 128.6% from the previous quarter. Driven by economy of scale with production volume ramp-up, its quarterly gross profit margin increased to 13.3% from 8% for the first quarter. To a startup who has delivered vehicles for just seven months, that is a great achievement.

By the end of the second quarter, Li had RMB3.7 billion (US$521.2 million) in cash and cash equivalents, restricted cash, time deposits and short-term investments, compared with RMB3.4 billion (US$478.9 million) as of March 31, 2020.

Li Auto aims to be a leader in the biggest NEV market. In the future, the startup will continue to develop SUV models with a full-size premium electric SUV to come in 2022. Afterwards, the company plans to expand the product portfolio with mid-size and compact SUV models to gain a broader consumer base.

With the new model, the company will introduce its next-generation EREV powertrain system. What’s more, a large sum will be allocated for developing core technologies, including enhancing Level 2 autonomous driving to ultimately develop Level 4 autonomous driving technology.

As of June 30, 2020, Li had over 700 sales and service personnel across 21 retail stores, 18 delivery centers, and 17 servicing centers across the country. To better serve customers, it will authorize and cooperate with third party body and paint shops to efficiently and effectively extend its service coverage.