Chinese Electric Vehicle Giant Li Auto To Raise $1.8Bn In Hong Kong Listing

There is some good news for China’s EV sector, but there’s equally disappointing news for the global EV giant, Tesla. Let’s find out why.

Chinese electric car maker ‘Li Auto’ has announced its plan to do a secondary listing in neighboring Hong Kong. Li Auto with its IPO in Hong Kong plans to raise close to $2 Billion. It will sell 100 million shares and the ceiling price of the shares would be capped at HK$150 ($19.30) during the IPO.

Why A Secondary Hong Kong Listing?

The six-year-old EV company has figured out its IPO allotment structure as follows: 10 Million shares to Hong Kong investors, and the remaining 90 Million shares to investors across the world.

Just the last year, Li Auto celebrated its Nasdaq listing where it raised over $1 Billion. However, due to straining ties between Beijing and Washington, investor sentiment has been negative. On top of that, China’s crackdown on its tech and education sector added fuel to the fire.

Chinese firms have been choosing the secondary listing route in Hong Kong to navigate through possible future negative relations between the two countries.

Li Auto’s Record EV Deliveries

Li Auto announced its delivery numbers this week and the company has had spectacular news for the stakeholders. It delivered a record number of vehicles in the month of July. Li Auto delivered 8,589 EVs (Li One Model).

Even while the world suffers from chip shortages, Li Auto coming out with record deliveries was hailed as a positive by many analysts. A similar story was seen with its American rival Tesla. However, moving forward the global chip shortage can cause troubles for many sectors.

China has a host of companies listed in Hong Kong. The major ones being Alibaba, NetEase, and JD.com. Li Auto’s Chinese competitor also raised $1.8 Billion with a secondary Hong Kong Listing

Trouble Incoming For Tesla?

Remember we mentioned the bad news for Tesla in the first paragraph?

Well.. with straining ties between Beijing and Washington, Tesla might land in trouble sometime soon and investors need to watch out. If Beijing decides to subsidize their domestic cars and make it difficult for foreign EV competitors, we’ll see some nasty cards being played out between the two leading world economies.

Tesla is one of the biggest EV players in the Chinese market selling some of the best models. It has its own factory in the Chinese land (Shangai) as well.

So if things become sour, Tesla is bound to take a hit. What do you think?