Beijing-based Automaker Li Auto Raises $1.47 Billion in its U.S. IPO, Stock Soars Over 43%

author: Eric Walz   

The Li Auto ONE SUV has a battery pack that can be charged by a small gas engine & generator or a conventional EV charger.

Beijing-based automaker Li Auto launched its U.S. initial public offering (IPO), becoming the latest automaker from China to launch a U.S. IPO on the NASDAQ to raise new funding.

Li Auto sold 95 million American depositary shares (ADSs) for $11.50 on the Nasdaq Global Select Market on Wednesday after marketing them between $8 to $10. On Thursday, Li Auto's stock surged 42% to $16.32 a share.   

Li Auto raised a total of US$1.47 billion in the initial public offering, assuming the underwriters of the initial public offering do not exercise their option to purchase additional ADSs.

Reuters first reported in January that Li Auto was planning to apply for an IPO in the U.S. The company has been preparing for its U.S. IPO since the summer of 2019. 

With Li Auto's U.S. listing, the company 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 rival NIO raised $1 billion with its U.S. IPO in 2018, much lower than its earlier target of $2 billion to $3 billion. However, NIO's stock hit an all-time high of $14.98 on July 10 after the automaker secured new lines of credit totaling RMB 10.4 billion. 

NIO's stock has rebounded this year on rising demand for NIO's EVs in China. Also rising are shares of electric automaker Tesla, which are also trading at record highs, rising by 276% in 2020 to over $1,500 a share.

The Li ONE Extended Range SUV

Unlike rivals Tesla, NIO and Xpeng Motors that are building purely electric vehicles, the Li Auto One SUV is classified as a New Energy Vehicle (NEV) in China. NEVs include fully-electric and hybrid powertrain models. The automaker's Li ONE SUV allows drivers to charge the vehicle's battery with electricity or gas. 

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

Although the Li ONE SUV is purely electric-driven by its electric motors, the energy source to power the electric motors come from both its battery pack and range extensionsystem 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. 

With this unique powertrain design, the Li ONE delivers a NEDC range of 800 kilometers (497 miles) with acceleration from zero to 62 mph in 6.5 seconds, the company wrote in its IPO filing. 

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

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

As a result, the Li ONE is priced closer to that of an internal combustion engine 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), while the fully-electric Model X starts at RMB772,900 (US$110,276).

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

Goldman Sachs (Asia) L.L.C., Morgan Stanley & Co. LLC, UBS Securities LLC, and China International Capital Corporation Hong Kong Securities Limited, are acting as lead underwriters of the Li Auto's U.S. IPO.

The Company has granted the underwriters an option, exercisable within 30 days from the date of the final prospectus, to purchase up to an aggregate of 14,250,000 additional ADSs.

The IPO offering is expected to close on August 3, 2020 and is subject to customary closing conditions.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.