Li Auto signs RMB1.625B equity financing for chip subsidiary
The automaker will contribute RMB1 billion, while outside investors commit RMB625 million to MHX Technology under conditional subscription agreements.
Adrian Kessler
A conditional RMB1.625 billion financing will support chip development after Li Auto Inc. NASDAQLI HKG2015 said on Friday that its MHX Technology subsidiary signed equity subscription agreements. Outside investors will contribute RMB625 million, while Li Auto will invest RMB1 billion through a wholly owned subsidiary.
Shanghai Mahe Xin Technology Co., Ltd., known as MHX Technology, houses Li Auto's chip and domain controller business. The Oct. 16 release says completion remains subject to customary closing conditions and gives no closing date. A separate investor has until Dec. 31 to subscribe for up to another RMB500 million.
Li Auto is a major Chinese manufacturer of premium smart electric vehicles, with both extended-range and battery electric models.
Nasdaq shares rose 1.78 per cent to US$11.46 at Thursday's 4 p.m. EDT close, according to NASDAQLI. That close preceded the GlobeNewswire release, published at 4:31 a.m. EDT on Friday.
Li Auto Expects to Retain Control
The external investors named in the Oct. 16 release include Hangzhou Jingtao, Lanchi Ventures, Huaye Tiancheng and MiraclePlus. The additional subscription right belongs to Hangzhou Jingtao Additional Investor and can be exercised once at the same price per unit of increased registered capital as the signed financing.
Outside investors account for about 38 per cent of the signed subscriptions, calculated from the amounts in the Oct. 16 release. Li Auto supplies the remaining capital, so most of the financing reflects the parent's own investment in the subsidiary.
MHX will also adopt two share incentive plans for employees and key contributors. With the additional investment right fully exercised and both incentive plans fully used, Li Auto expects to own approximately 74.01 per cent of MHX.
External investors would hold 6.58 per cent, while entities administering the incentive plans would hold 19.41 per cent. These percentages describe the assumed structure after both the optional investment and incentive allocations.
The equity subscriptions are at MHX, so outside investors and incentive entities would share ownership of the chip business. Li Auto says it will retain control and continue consolidating MHX's financial results. The release provides no existing ownership percentage from which to calculate the reduction in Li Auto's stake.
"The establishment of MHX Technology as a dedicated platform for the chip and domain controller business positions it to capitalize on broader industrial opportunities, particularly in non-automotive sectors, and realize enhanced economies of scale," Li Auto said in its Oct. 16 release.
Li Auto Sees Opportunities Beyond Automobiles
The financing would support MHX's research, development and commercialisation, according to the Oct. 16 release. It supplies no dated chip tape-out, production target or first-customer shipment milestone, leaving the commercial timetable unspecified in that announcement.
Chinese rival XPeng Inc. NYSEXPEV HKG9868 described an in-house architecture spanning Turing AI chips, foundation models and integrated hardware and software in its Oct. 1 release. XPeng says its technology foundation supports smart electric vehicles, robotaxis and humanoid robots.
Li Auto reported 31,817 vehicle deliveries for September, while XPeng reported 41,256 in its Oct. 1 update. XPeng said its monthly total increased 5 per cent from August. Li Auto's September delivery update also described a MACH VLA 2.0 software rollout to nearly one million Li AD Max vehicles powered by Orin-X and Thor chips.
Hangzhou Jingtao Additional Investor has until Dec. 31 to exercise its one-time right. That decision will determine whether it subscribes for up to another RMB500 million at the agreed price.
