$LI Li Auto's SUV. Photo: Handout alt=Li Auto's SUV. Photo: Handout
China's electric car start-ups are tanking up on capital to fuel an intense fight for market share.
Xpeng Motors has made a confidential filing for a listing in the US, while New York-listed NIO shares have tripled so far this year. Elsewhere, Zhejiang-based carmaker Geely Automobile Holdings, which makes the Geometry A electric car, said it plans to list on Shanghai's Nasdaq-style Star Market later this year.
Investors are keen to jump on the electric-vehicle bandwagon after watching 17-year-old, California-based Tesla overtake Toyota Motor, Volkswagen and Hyundai Motor this year in terms of combined market value to become the world's most valuable carmaker. Tesla sells its Model 3, Model S and Model X in China.
Li Auto, founded by serial entrepreneur Xiang Li, is the first company in China to commercialise what is known as extended-range technology for electric vehicles, which helps solve the problem of a lack of charging infrastructure across China and still developing battery technology. If the car's battery runs down then a combustion engine provides electrical power.
More than 80 per cent of Chinese car owners do not have their own car parking space which means they cannot install their own charging point, said Future Capital's Huang. Many consumers are still anxious about their car's charge running low with nowhere to top up.
"Xiang Li has a deep understanding of the preferences and the pain points of car owners in China," said Huang, who has known Li for more than 15 years.
While Li Auto still has negative cash flow, the capital-intensive electric vehicle market is at a very early growth stage, still only around 5 per cent of car sales in China. "Its still at a very fast growing and everybody is trying to grab market share," said Huang.
Li also founded car internet platform Autohome, which now has a market capitalisation of over US$10 billion on the New York Stock Exchange, which gave many investors the confidence to back his new venture despite fierce competition in the sector.
Li Auto and Xpeng have chosen to list in the US despite rising US-China tensions.
