For China's new car makers, more ammunition through expanded financing channels is always welcome.
In addition to listing in Hong Kong, XPeng Motors and NIO are considering a third listing in China's A-share market in the future, the People's Daily-run International Finance Daily recently reported, citing unnamed sources familiar with the matter.
The report did not provide more details, but it's worth noting that on the day XPeng listed in Hong Kong on July 7, the company's vice chairman and president Brian Gu said XPeng was pleased to be listed in Hong Kong and thought it would be closer to local investors and would consider returning to the A-share market in the future.
XPeng's Hong Kong listing is more about strategic objectives than financing needs, Gu said, adding that XPeng's dual primary listing is expected to qualify for inclusion in the Mainland-Hong Kong Stock Connect, linking it to Greater China investors, particularly those in the mainland.
XPeng has always wanted to allow customers to become investors at the same time, he said, adding that now it is difficult to do share swaps between different markets and the company will continue to pay attention to the development of the A-share market.
Each of the three companies is aiming for a public offering of at least 5 percent of its shares in Hong Kong, with a combined financing amount that could be around $5 billion, Reuters reported at the time.
In late March, new reports said the three companies had approached investment banks to prepare for Hong Kong listings. Subsequently, both NIO and XPeng reportedly submitted applications to the Hong Kong Stock Exchange.
There was no further progress on their Hong Kong listings until XPeng passed the HKEx listing hearing on June 23.
Up to now, there is no further report on the Hong Kong listing progresses of NIO and Li Auto.
Li said at the time that Li Auto does not mind getting its capital reserves in any kind of way, including financing from the secondary market, bank loans, and debt issuance.
Behind these companies' desire to expand their financing channels is the need for large amounts of capital for their rapid expansion.
As of now, they are not short of funds. As of March 31, NIO's cash and cash equivalents, restricted cash and short-term investment were RMB 47.5 billion ($7.3 billion), XPeng's was RMB 36.2 billion, and Li Auto's was RMB 30.36 billion.
(Screenshot of NIO's first-quarter financial results)
Despite such a high cash reserve, it still need to keep burning money before reaching stable profitability.
Between 2018 and 2020, XPeng has an accumulated net loss of RMB 7.823 billion. In terms of R&D expenses, XPeng has spent RMB 4.847 billion during these three years.
In addition, two models to be delivered by XPeng in the second half of this year will need financial support. The XPeng G3i was unveiled last week and deliveries are expected to start in September. XPeng P5 was unveiled in April and deliveries will start in the fourth quarter of this year.
NIO's flagship sedan, the ET7, will be delivered in the first quarter of next year. At the end of last month, yiche.com quoted the company's co-founder and president Qin Lihong as saying that NIO would launch a new model around the end of the year, not the ET7 but perhaps a sedan as well.
Li Auto released an upgraded version of its only model, the Li ONE, at the end of May, and it has started deliveries in June. According to a report by cheshi.com late last month, Li Auto will release a new big SUV codenamed X01 in 2022, with a full size upgrade compared to Li ONE.