China’s giant and competitive electric car market has hit a new billionaire, whose goal is to convince the country’s consumers with cars designed to be innovative and affordable.
Li Xiang, founder of Beijing-based EV start-up Li Auto saw his company’s shares only 50% after debuting on the Nasdaq on Thursday. Li Auto raised $1.1 billion through the promotion of 95 million U.S. deposit shares at $11.5 each, giving the company a market price of $11 billion. Li owns a 21.3% stake, which gives it a net price of $2.9 billion.
According to analysts, Li Auto has managed to forge a position in the competitive position of china’s electric vehicle market, which is also the largest in the world, through the focused circle of family users. The company is best known for Li ONE, a six-seater electric SUV sold for 328,000 yuan ($47,000). To differentiate their cars from more established models, such as Tesla’s purely electric cars, Li Xiang has developed a formula called EREV (Extended Diversity Electric Cars). Li’s formula is powered by electric power from battery packs and an internal combustion engine.
“They aren’t competing directly with Tesla,” says John Zeng, a Shanghai-based director of China Forecasting at consultancy LMC Automotive. “They have found a unique way to develop their models.”
Li Auto sold 10,400 cars as of June 30 this year after Li ONE’s mass production in November 2019, according to its prospectus. The company reported an overall loss of $463 million in $40 million in profits last year, but appears to be burning less money this year.
In the first 3 months of 2020, revenue increased to $120 million, while losses attributable to shareholders decreased to $34 million. The company has already closed its 21 retail outlets nationwide to comply with China’s quarantine rules, however, most retail outlets have reopened since then.
Li Auto has controlled attracting several well-known investors, such as Hong Kong food delivery giant Meituan Dianping and short video platform Tik Tok, the parent company ByteDance. Meituan’s billionaire founder, Wang Xing, has been the corporate director since July 2019.
I am founded in Beijing and cover the Chinese generation sector. I make a contribution to Forbes, and in the past I have been self-employed for SCMP and Nikkei. Before Beijing, I spent six
I am founded in Beijing and cover the Chinese generation sector. I make a contribution to Forbes, and in the past I have been self-employed for SCMP and Nikkei. Before Beijing, I spent six months as an intern in the Hong Kong workplace of TIME magazine. I graduated from the Medill School of Journalism, Northwestern University. Email: [email protected] Twitter: @yueyueyuewang