Li Auto is mulling an overseas assembly, perhaps in Europe
Li Auto, one of three New York-listed Chinese electric vehicle (EV) makers chasing Tesla's market lead, said it is mulling the possibility of an offshore production base - perhaps in Europe - to be its stepping stone for the global market, as it maps out a strategy to outgrow China's bare-knuckle EV market.
"We want to be a winner, not just a mere participant, in the global market," Li Auto's president and co-founder Shen Yanan said in an interview before the six-year-old EV maker's HK$11.8 billion (US$1.52 billion) initial public offering (IPO) in Hong Kong.
"To win market share overseas, a car company has to develop the right product to attract customers with tastes" and requirements that differ from mainland Chinese users, he said. "We have set up a team dedicated to the overseas markets and we are meticulously working on the plans to find a winning formula."
Li Auto's shares began trading unchanged in Hong Kong from their HK$118 offer price. The company's American depositary receipts rose 1.1 per cent to US$30.72 overnight in New York.
The plan comes as an estimated 500 EV makers at various stages of planning and production are vying for sales in the world's largest vehicle market, where three in every five new vehicles on China's roads are expected to be powered by electricity by 2030, according to a UBS forecast. Deliveries of so-called new energy vehicles jumped 12 per cent to 1.17 million units in 2020, nearly half of the global total.
Li Auto's Hong Kong IPO adds to the US$1.1 billion war chest it assembled from its New York IPO in July 2020, giving it the financial resources to develop new models and expand production capacity.
Backed by China's food delivery giant Meituan with a 16.2 per cent stake, Li Auto delivered 38,743 EVs in the first seven months of 2021, neck and neck with rival Xpeng Motors, behind NIO's 49,900 units and lagging the 205,100 cars sold by BYD, according to the companies.
Xpeng and NIO have both started shipping China-made EVs to Norway, using the Nordic region as the foothold for their exports. Still, the Nordics' combined population of 27 million people makes for a relatively small exports market, which behoves Li Auto to look for a local assembly to sell to the entire continent, said Shen, who also goes by Kevin.
"Europe's EV market has been growing fast and all EV companies should watch it closely," said David Zhang, a researcher of automotive industries at the North China University of Technology. "Only companies with strong presence in all the major EV markets worldwide can be labelled as a true international powerhouse."
Li, who turns 41 in October, is a bit of an idealist: a firm believer in using renewable energy to solve the world's environmental problems.
Beijing, where Li Auto's head office is located, had some of China's most bad-air days in 2013 before Li started his EV company, as a combination of open-air coal burning, inclement weather, dust storms and vehicle emissions frequently clouded the Chinese capital's air quality.
"Li Xiang is a rare breed, a top-notch product manager who possesses the boldness to be different, with a relentless dedication to creating value for end users," said Huang Mingming, founder and chief executive of Future Capital, the first investor to back Li Auto in 2015. "He has a deep understanding of the preferences and pain points of car owners and drivers in China."
Li, described as the person responsible for setting the company's direction and product development, laid down a two-stage plan for his start-up: start by selling a small EV for convenient commuting, before expanding into an all-electric sports-utility vehicle (SUV) that could meet the needs of an entire family. Plans for the small EV flopped because its specifications failed to keep up with China's changing regulations, making it unfit for mass usage.
Li Auto's first model, named Li One, rolled off the company's assembly in 2019 in Changzhou, a city of fewer than 5 million residents located on the southern banks of the Yangtze River in Jiangsu province. Li One, carrying a sticker price of 338,000 yuan (US$52,150), delivered 33,457 units last year, rising to 63,000 vehicles by the end of June. Shen expects the carmaker to break the 10,000-vehicle monthly barrier - the definition of a blockbuster in China - before September.
A full-size SUV is on its way, scheduled some time in 2022 based on its new X platform that can produce next-generation extended range EVs with a new power train, with plans to launch at least two premium EVs every year starting from 2023, Li Auto said in its listing prospectus.
Liauto.com; South China Morning Post (SCMP)