Chinese automaker Lixiang plans $500 million U.S. stock IPO

HONG KONG/BEIJING — Chinese electric vehicle maker Lixiang Automotive has filed for a U.S. initial public offering, aiming to raise at least $500 million, said two people with direct knowledge of the matter, joining peers seeking to finance growth through stock listings.

Lixiang, also known as CHJ Automotive, founded by entrepreneur Li Xiang, confidentially filed in December for the IPO, which will take place as early as the first half of 2020, said the sources.

The Beijing-based carmaker has been working on the IPO since the summer of last year and hired Goldman Sachs as the main bank leading the deal, said the people.

The listing comes amid what bankers and industry insiders describe as increasingly tough financing conditions for loss-making Chinese EV startups, which are competing for sales and fresh capital in a crowded market. Such firms also face cuts to government EV subsidies and need to produce convincing arguments about future profitability.

If the IPO proceeds, Lixiang would become the second Chinese EV startup to list in New York after NIO Inc’s $1 billion IPO in 2018. NIO’s shares have tumbled more than 40% since its debut despite better-than-expected third quarter results.

Lixiang and Goldman declined to comment.

China’s new energy vehicle market, which include plug-in hybrids and battery-only electric vehicles, is the world’s largest. Sales in the sector jumped almost 62% in 2018 even as the broader auto market contracted.

However, industry officials have warned such volumes were unlikely to be sustained as customers held back on purchases following the subsidies cuts. In November, NEV sales fell for their fifth straight month.

Lixiang, advised by Goldman, raised $530 million in its most recent fundraising round last year.

That round was led by Meituan Dianping chief executive Wang Xing and valued the automaker at $2.93 billion, according to a statement from Source Code Capital, one of its existing investors.

The company obtained an auto manufacturing license in 2018 after acquiring a traditional carmaker in Chongqing for 650 million yuan.

It started mass production of its range-extended electric Ideal One model in its wholly owned plant in the eastern city of Changzhou in November, according to its official WeChat account.

The sport utility vehicle is priced from 328,000 yuan ($47,000) apiece after subsidies, which compares with NIO’s electric SUV ES6 priced from 358,000 yuan ($51,000).