UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of February 2022

 

Commission File Number: 001-39407

 

 

 

Li Auto Inc.

(Registrant’s Name)

 

 

 

11 Wenliang Street

Shunyi District, Beijing 101399

People’s Republic of China

(Address of Principal Executive Offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x      Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

 

 

 

EXPLANATORY NOTE

 

We made an announcement dated February 25, 2022 with The Stock Exchange of Hong Kong Limited in relation to our annual results for the year ended December 31, 2021. For details, please refer to exhibit 99.3 to this current report on Form 6-K.

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Press Release—Li Auto Inc. Announces Management Change
99.2   Press Release—Li Auto Inc. Announces Unaudited Fourth Quarter and Full Year 2021 Financial Results
99.3   Announcement—Annual Results Announcement for the Year Ended December 31, 2021

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Li Auto Inc.

 

  By   /s/ Tie Li
  Name : Tie Li
  Title : Director and Chief Financial Officer

 

Date: February 25, 2022

 

 

 

 

 

Exhibit 99.1

 

 

 

Li Auto Inc. Announces Management Change

 

BEIJING, China, Feb 25, 2022 — Li Auto Inc. ("Li Auto" or the "Company") (Nasdaq: LI; HKEX: 2015), an innovator in China’s new energy vehicle market, today announced that Mr. Kai Wang has tendered his resignation as chief technology officer of the Company for personal reasons. Mr. Donghui Ma, the Company’s chief engineer, will assume the responsibilities in managing Li Auto's research and development in intelligent vehicle technologies. Mr. Kai Wang will continue to serve as the Company's senior advisor until December 31, 2022 to ensure a smooth transition.

 

About Li Auto Inc.

 

Li Auto Inc. is an innovator in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is to create homes on the move that bring happiness to the entire family (“创造移动的家,创造幸福的家”). Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer to successfully commercialize extended-range electric vehicles in China. Its first model, Li ONE, is a six-seat, large premium smart electric SUV. The Company started volume production of Li ONE in November 2019 and released the 2021 Li ONE in May 2021. The Company leverages technology to create value for its users. It concentrates its in-house development efforts on its proprietary range extension system, next-generation electric vehicle technology, and smart vehicle solutions. Beyond Li ONE, the Company will expand its product line by developing new vehicles, including BEVs and EREVs, to target a broader consumer base.

 

For more information, please visit: http://ir.lixiang.com.

 

Safe Harbor Statement

 

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Li Auto may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Li Auto’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Li Auto’s strategies, future business development, and financial condition and results of operations; Li Auto’s limited operating history; risks associated with extended-range electric vehicles; Li Auto’s ability to develop, manufacture, and deliver vehicles of high quality and appeal to customers; Li Auto’s ability to generate positive cash flow and profits; product defects or any other failure of vehicles to perform as expected; Li Auto’s ability to compete successfully; Li Auto’s ability to build its brand and withstand negative publicity; cancellation of orders for Li Auto’s vehicles; Li Auto’s ability to develop new vehicles; and changes in consumer demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Li Auto’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Li Auto does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

 

 

 

For investor and media inquiries, please contact:

 

Li Auto Inc.

Investor Relations

Email: ir@lixiang.com

 

The Piacente Group, Inc.

Yang Song

Tel: +86-10-6508-0677

Email: Li@tpg-ir.com

 

Brandi Piacente

Tel: +1-212-481-2050

Email: Li@tpg-ir.com

 

Li Auto Inc.

 

 

 

 

Exhibit 99.2

 

 

Li Auto Inc. Announces Unaudited Fourth Quarter and Full Year 2021 Financial Results

 

Quarterly total revenues reached RMB10.62 billion (US$1.67 billion)1

Quarterly deliveries reached 35,221 vehicles

Quarterly gross margin reached 22.4%

Full year total revenues reached RMB27.01 billion (US$4.24 billion)

Full year deliveries were 90,491 vehicles

Full year gross margin reached 21.3%

 

BEIJING, China, Feb 25, 2022 — Li Auto Inc. ("Li Auto" or the "Company") (Nasdaq: LI; HKEX: 2015), an innovator in China’s new energy vehicle market, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021.

 

Operating Highlights for the Fourth Quarter of 2021 and Full Year 2021

 

·Deliveries of Li ONE were 35,221 vehicles in the fourth quarter of 2021, representing a 40.2% quarter-over-quarter increase and a 143.5% year-over-year increase.

 

·Deliveries of Li ONE for the full year 2021 reached 90,491 vehicles, representing an increase of 177.4% from 32,624 vehicles in 2020.

 

   FY 2021   2021 Q4   2021 Q3   2021 Q2   2021 Q1 
Deliveries   90,491    35,221    25,116    17,575    12,579 

 

   FY 2020   2020 Q4   2020 Q3   2020 Q2   2020 Q1 
Deliveries   32,624    14,464    8,660    6,604    2,896 

 

·As of December 31, 2021, the Company had 206 retail stores covering 102 cities and 278 servicing centers and Li Auto-authorized body and paint shops operating in 204 cities.

 

Financial Highlights for the Fourth Quarter of 2021

 

·Vehicle sales were RMB10.38 billion (US$1.63 billion) in the fourth quarter of 2021, representing an increase of 155.7% from RMB4.06 billion in the fourth quarter of 2020 and an increase of 40.5% from RMB7.39 billion in the third quarter of 2021.

 

·Vehicle margin2 was 22.3% in the fourth quarter of 2021, compared with 17.1% in the fourth quarter of 2020 and 21.1% in the third quarter of 2021.

 

·Total revenues were RMB10.62 billion (US$1.67 billion) in the fourth quarter of 2021, representing an increase of 156.1% from RMB4.15 billion in the fourth quarter of 2020 and an increase of 36.6% from RMB7.78 billion in the third quarter of 2021.

 

·Gross profit was RMB2.38 billion (US$373.5 million) in the fourth quarter of 2021, representing an increase of 228.5% from RMB724.6 million in the fourth quarter of 2020 and an increase of 31.3% from RMB1.81 billion in the third quarter of 2021.

 

·Gross margin was 22.4% in the fourth quarter of 2021, compared with 17.5% in the fourth quarter of 2020 and 23.3% in the third quarter of 2021.

 

 

1 All translations from Renminbi (“RMB”) to U.S. dollar (“US$”) are made at a rate of RMB6.3726 to US$1.00, the noon buying rate in effect on December 30, 2021 as set forth in the H.10 statistical release of the Federal Reserve Board.

 

2 Vehicle margin is the margin of vehicle sales, which is calculated based on revenues and cost of sales derived from vehicle sales only.

 

1

 

 

·Income from operations was RMB24.1 million (US$3.8 million) in the fourth quarter of 2021, compared with RMB78.9 million loss from operations in the fourth quarter of 2020 and RMB97.8 million loss from operations in the third quarter of 2021. Non-GAAP income from operations3 was RMB415.0 million (US$65.1 million) in the fourth quarter of 2021, compared with RMB71.1 million Non-GAAP loss from operations3 in the fourth quarter of 2020 and RMB259.4 million Non-GAAP income from operations in the third quarter of 2021.

 

·Net Income was RMB295.5 million (US$46.4 million) in the fourth quarter of 2021, compared with RMB107.5 million net income in the fourth quarter of 2020 and RMB21.5 million net loss in the third quarter of 2021. Non-GAAP net income3 was RMB686.4 million (US$107.7 million) in the fourth quarter of 2021, representing an increase of 494.7% from RMB115.4 million in the fourth quarter of 2020 and an increase of 104.5% from RMB335.7 million in the third quarter of 2021.

 

·Operating cash flow was RMB3.84 billion (US$602.1 million) in the fourth quarter of 2021, representing an increase of 110.7% from RMB1.82 billion in the fourth quarter of 2020 and an increase of 76.9% from RMB2.17 billion in the third quarter of 2021.

 

·Free cash flow4 was RMB1.62 billion (US$253.5 million) in the fourth quarter of 2021, compared with RMB1.60 billion in the fourth quarter of 2020 and RMB1.16 billion in the third quarter of 2021.

 

Key Financial Results

 

(in millions, except for percentages)

 

   For the Three Months Ended   % Change5 
   December 31,
2020
  

September 30,
2021

   December 31,
2021
   YoY   QoQ 
   RMB   RMB   RMB         
Vehicle sales   4,057.7    7,385.8    10,375.7    155.7%   40.5%
Vehicle margin   17.1%   21.1%   22.3%   5.2%   1.2%
                          
Total revenues   4,146.9    7,775.2    10,620.5    156.1%   36.6%
Gross profit   724.6    1,812.0    2,380.0    228.5%   31.3%
Gross margin   17.5%   23.3%   22.4%   4.9%   (0.9)%
                          
(Loss)/Income from operations   (78.9)   (97.8)   24.1    N/A    N/A 
Non-GAAP (loss)/income from operations   (71.1)   259.4    415.0    N/A    60.0%
                          
Net income/(loss)   107.5    (21.5)   295.5    174.9%   N/A 
Non-GAAP net income   115.4    335.7    686.4    494.8%   104.5%
                          
Operating cash flow   1,821.3    2,169.5    3,836.9    110.7%   76.9%
Free cash flow   1,599.1    1,165.0    1,615.4    1.0%   38.7%

 

 

3 The Company’s Non-GAAP financial measures exclude share-based compensation expenses, changes in fair value of warrants and derivative liabilities, accretion on convertible redeemable preferred shares to redemption value, and the effect of exchange rate changes on convertible redeemable preferred shares. See “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

 

4 Free cash flow represents operating cash flow less capital expenditures, which is considered a Non-GAAP financial measure.

 

5 Except for vehicle margin and gross margin, where absolute changes instead of percentage changes are presented.

 

2

 

 

Financial Highlights for the Full Year 2021

 

·Vehicle sales were RMB26.13 billion (US$4.10 billion) in 2021, representing an increase of 181.5% from RMB9.28 billion in 2020.

 

·Vehicle margin was 20.6% in 2021, compared with 16.4% in 2020.

 

·Total revenues were RMB27.01 billion (US$4.24 billion) in 2021, representing an increase of 185.6% from RMB9.46 billion in 2020.

 

·Gross profit was RMB5.76 billion (US$904.1 million) in 2021, representing an increase of 271.9% from RMB1.55 billion in 2020.

 

·Gross margin was 21.3% in 2021, compared with 16.4% in 2020.

 

·Loss from operations was RMB1.02 billion (US$159.6 million) in 2021, representing an increase of 52.0% from RMB669.3 million in 2020. Non-GAAP income from operations was RMB84.0 million (US$13.2 million) in 2021, compared with RMB526.5 million Non-GAAP loss from operations in 2020.

 

·Net loss was RMB321.5 million (US$50.4 million) in 2021, representing an increase of 111.9% from RMB151.7 million in 2020. Non-GAAP net income was RMB779.9 million (US$122.4 million) in 2021, compared with RMB281.2 million Non-GAAP net loss3 in 2020.

 

·Operating cash flow was RMB8.34 billion (US$1.31 billion) in 2021, representing an increase of 165.6% from RMB3.14 billion in 2020.

 

·Free cash flow was RMB4.33 billion (US$679.9 million) in 2021, representing an increase of 75.8% from RMB2.46 billion in 2020.

 

Key Financial Results

 

(in millions, except for percentages)

 

   For the Year Ended   % Change5 
   December 31,
2020
   December 31,
2021
   YoY 
   RMB   RMB     
Vehicle sales   9,282.7    26,128.5    181.5%
Vehicle margin   16.4%   20.6%   4.2%
                
Total revenues   9,456.6    27,009.8    185.6%
Gross profit   1,549.3    5,761.5    271.9%
Gross margin   16.4%   21.3%   4.9%
                
Loss from operations   (669.3)   (1,017.3)   52.0%
Non-GAAP (loss)/income from operations   (526.5)   84.0    N/A 
                
Net loss   (151.7)   (321.5)   111.9%
Non-GAAP net (loss)/income   (281.2)   779.9    N/A 
                
Operating cash flow   3,139.8    8,340.4    165.6%
Free cash flow   2,464.6    4,332.7    75.8%

 

3

 

 

Recent Developments

 

Deliveries Update

 

·In January 2022, the Company delivered 12,268 Li ONEs, representing a 128.1% increase from January 2021. As of January 31, 2022, the Company had 220 retail stores covering 105 cities, in addition to 276 servicing centers and Li Auto-authorized body and paint shops operating in 204 cities.

 

OTA 3.0 Release

 

·In December 2021, the Company released the OTA 3.0 update to all Li ONE users, further enhancing their in-car experience. This update features the Navigation on ADAS (NOA) and vision-enhanced Automatic Emergency Braking (AEB) functions for the 2021 Li ONE. The OTA 3.0 update also includes an upgraded version of Li ONE’s smart in-car voice assistant, Li Xiang Tong Xue(理想同学), which now supports more advanced voice instructions for in-car applications and vehicle control settings.

 

Chongqing Manufacturing Base

 

·In December 2021, the Company agreed to establish a strategic cooperation framework with the Chongqing municipal government to build its Chongqing manufacturing base in the Liangjiang New Area. The addition of this manufacturing base will further enhance the Company’s ability to meet increasingly strong market demand and cement its foundation for continued growth.

 

4

 

 

CEO and CFO Comments

 

Mr. Xiang Li, founder, chairman, and chief executive officer of Li Auto, commented, “We achieved profitability and RMB3.8 billion operating cash flow in the fourth quarter even as we accelerated the pace of R&D investment and sales network expansion – a significant reflection of our operating excellence.

 

“In December 2021, we introduced the OTA 3.0 update to all our Li ONE users, which features our full-stack self-developed NOA and full AEB functions enhanced by vision perception algorithm to enable safer and easier driving. It made us the third automaker in the world capable of full-stack self-development of NOA. Due to its outstanding AEB performance, Li ONE was awarded Champion of the Year 2021 accolade during a third-party AEB test, where it was the only assessed model capable of accurately identifying crossing vehicles and two-wheelers, demonstrating our strong ADAS R&D capabilities. As of January 31, 2022, we provided NOA to over 70,000 family users. In 2022, we will remain focused on R&D investment, further elevating our capabilities to provide our users with products and services that offer greater safety, convenience and comfort.”

 

“Our robust performance in the fourth quarter of 2021 capped a remarkable year of growth for Li Auto,” added Mr. Tie Li, Li Auto’s chief financial officer. “Driven by an impressive number of vehicle deliveries, we achieved revenues of RMB10.6 billion for the fourth quarter and RMB27.0 billion for the full year of 2021, up 156.1% and 185.6% year over year, respectively. Our vehicle margin in the fourth quarter increased to 22.3% and full-year vehicle margin came in at 20.6%, boosted by our outstanding operating efficiency in manufacturing and supply chain management. Additionally, as we continued to scale up deliveries while remaining highly focused on disciplined execution, our full-year operating cash flow reached RMB8.3 billion, providing us with strong support for R&D investment and business growth.”

 

Financial Results for the Fourth Quarter of 2021

 

Revenues

 

·Total revenues were RMB10.62 billion (US$1.67 billion) in the fourth quarter of 2021, representing an increase of 156.1% from RMB4.15 billion in the fourth quarter of 2020 and an increase of 36.6% from RMB7.78 billion in the third quarter of 2021.

 

·Vehicle sales were RMB10.38 billion (US$1.63 billion) in the fourth quarter of 2021, representing an increase of 155.7% from RMB4.06 billion in the fourth quarter of 2020 and an increase of 40.5% from RMB7.39 billion in the third quarter of 2021. The increase in revenue from vehicle sales over the fourth quarter of 2020 and the third quarter of 2021 was mainly attributable to the increase of vehicle deliveries in the fourth quarter of 2021.

 

·Other sales and services were RMB244.7 million (US$38.4 million) in the fourth quarter of 2021, representing an increase of 174.5% from RMB89.2 million in the fourth quarter of 2020 and a decrease of 37.1% from RMB389.4 million in the third quarter of 2021. The increase in revenue from other sales and services over the fourth quarter of 2020 was mainly attributable to increased sales of charging stalls, accessories and services in line with higher accumulated vehicle sales. The decrease in revenue from other sales and services over the third quarter of 2021 was attributable to the sales of automotive regulatory credits in the third quarter of 2021, which did not recur in the fourth quarter of 2021.

 

Cost of Sales and Gross Margin

 

·Cost of sales was RMB8.24 billion (US$1.29 billion) in the fourth quarter of 2021, representing an increase of 140.8% from RMB3.42 billion in the fourth quarter of 2020 and an increase of 38.2% from RMB5.96 billion in the third quarter of 2021. The increase in cost of sales over the fourth quarter of 2020 and the third quarter of 2021 was in line with revenue growth, which was mainly driven by the increase in vehicle deliveries in the fourth quarter of 2021.

 

·Gross profit was RMB2.38 billion (US$373.5 million) in the fourth quarter of 2021, representing an increase of 228.5% from RMB724.6 million in the fourth quarter of 2020 and an increase of 31.3% from RMB1.81 billion in the third quarter of 2021.

 

·Vehicle margin was 22.3% in the fourth quarter of 2021, compared with 17.1% in the fourth quarter of 2020 and 21.1% in the third quarter of 2021. The increase in vehicle margin over the fourth quarter of 2020 was primarily driven by higher average selling price attributable to the increase of vehicle deliveries of 2021 Li ONE since its release in May 2021.

 

·Gross margin was 22.4% in the fourth quarter of 2021, compared with 17.5% in the fourth quarter of 2020 and 23.3% in the third quarter of 2021.

 

5

 

 

Operating Expenses

 

·Operating expenses were RMB2.36 billion (US$369.7 million) in the fourth quarter of 2021, representing an increase of 193.2% from RMB803.5 million in the fourth quarter of 2020 and an increase of 23.4% from RMB1.91 billion in the third quarter of 2021.

 

·Research and development expenses were RMB1.23 billion (US$193.0 million) in the fourth quarter of 2021, representing an increase of 228.7% from RMB374.2 million in the fourth quarter of 2020 and an increase of 38.4% from RMB888.5 million in the third quarter of 2021. The increase in research and development expenses over the fourth quarter of 2020 and the third quarter of 2021 was primarily driven by increased employee compensation as a result of growing number of research and development staff as well as increased costs associated with new products developments.

 

·Selling, general and administrative expenses were RMB1.13 billion (US$176.7 million) in the fourth quarter of 2021, representing an increase of 162.2% from RMB429.3 million in the fourth quarter of 2020 and an increase of 10.2% from RMB1.02 billion in the third quarter of 2021. The increase in selling, general and administrative expenses over the fourth quarter of 2020 was primarily driven by increased employee compensation as a result of growing number of staff, as well as increased marketing and promotional activities and rental expenses associated with the expansion of the Company’s sales network.

 

Income/Loss from Operations

 

·Income from operations was RMB24.1 million (US$3.8 million) in the fourth quarter of 2021, compared with RMB78.9 million loss from operations in the fourth quarter of 2020 and RMB97.8 million loss from operations in the third quarter of 2021. Non-GAAP income from operations was RMB415.0 million (US$65.1 million) in the fourth quarter of 2021, compared with RMB71.1 million Non-GAAP loss from operations in the fourth quarter of 2020 and RMB259.4 million Non-GAAP income from operations in the third quarter of 2021.

 

Net Income/Loss and Net Earnings/Loss Per Share

 

·Net Income was RMB295.5 million (US$46.4 million) in the fourth quarter of 2021, compared with RMB107.5 million net income in the fourth quarter of 2020 and RMB21.5 million net loss in the third quarter of 2021. Non-GAAP net income was RMB686.4 million (US$107.7million) in the fourth quarter of 2021, representing an increase of 494.7% from RMB115.4 million in the fourth quarter of 2020 and an increase of 104.5% from RMB335.7 million in the third quarter of 2021.

 

·Basic and diluted net earnings per ADS6 attributable to ordinary shareholders were RMB0.31 (US$0.05) and RMB0.29 (US$0.05), respectively in the fourth quarter of 2021. Non-GAAP basic and diluted net earnings per ADS attributable to ordinary shareholders3 were RMB0.71 (US$0.11) and RMB0.68 (US$0.11), respectively in the fourth quarter of 2021.

 

Cash Position, Operating Cash Flow and Free Cash Flow

 

·Balance of cash and cash equivalents, restricted cash, time deposits and short-term investments was RMB50.16 billion (US$7.87 billion) as of December 31, 2021.

 

·Operating cash flow was RMB3.84 billion (US$602.1 million) in the fourth quarter of 2021, representing an increase of 110.7% from RMB1.82 billion in the fourth quarter of 2020 and an increase of 76.9% from RMB2.17 billion in the third quarter of 2021.

 

·Free cash flow was RMB1.62 billion (US$253.5 million) in the fourth quarter of 2021, compared with RMB1.60 billion in the fourth quarter of 2020 and RMB1.16 billion in the third quarter of 2021.

 

 

6 Each ADS represents two Class A ordinary shares.

 

6

 

 

Financial Results for the Full Year 2021

 

Revenues

 

·Total revenues were RMB27.01 billion (US$4.24 billion) in 2021, representing an increase of 185.6% from RMB9.46 billion in 2020.

 

·Vehicle sales were RMB26.13 billion (US$4.10 billion) in 2021, representing an increase of 181.5% from RMB9.28 billion in 2020. The increase in revenue from vehicle sales was mainly attributable to the increase of vehicle deliveries in 2021.

 

·Other sales and services were RMB881.3 million (US$138.3 million) in 2021, representing an increase of 406.8% from RMB173.9 million in 2020. The increase in revenue from other sales and services was mainly attributable to increased sales of charging stalls, accessories and services in line with higher accumulated vehicle sales, and the sales of automotive regulatory credits.

 

Cost of Sales and Gross Margin

 

·Cost of sales was RMB21.25 billion (US$3.33 billion) in 2021, representing an increase of 168.7% from RMB7.91 billion in 2020. The increase in cost of sales was in line with revenue growth, which was mainly driven by the increase in vehicle deliveries in 2021.

 

·Gross profit was RMB5.76 billion (US$904.1 million) in 2021, representing an increase of 271.9% from RMB1.55 billion in 2020.

 

·Vehicle margin was 20.6% in 2021, compared with 16.4% in 2020. The increase in vehicle margin was primarily driven by improved cost control in supply chain management and higher average selling price attributable to the increase of vehicle deliveries in 2021, with the launch of the 2021 Li ONE in May 2021.

 

·Gross margin was 21.3% in 2021, compared with 16.4% in 2020. The increase was mainly driven by the increase of vehicle margin.

 

Operating Expenses

 

·Operating expenses were RMB6.78 billion (US$1.06 billion) in 2021, representing an increase of 205.5% from RMB2.22 billion in 2020.

 

·Research and development expenses were RMB3.29 billion (US$515.7 million) in 2021, representing an increase of 198.8% from RMB1.10 billion in 2020. The increase in research and development expenses was primarily attributable to increased employee compensation as a result of growing number of research and development staff as well as increased costs associated with new products developments.

 

·Selling, general and administrative expenses were RMB3.49 billion (US$548.0 million) in 2021, representing an increase of 212.1% from RMB1.12 billion in 2020. The increase in selling, general and administrative expenses was primarily driven by increased employee compensation as a result of growing number of staff, as well as increased marketing and promotional activities and rental expenses associated with the expansion of the Company’s sales network.

 

7

 

 

Income/Loss from Operations

 

·Loss from operations was RMB1.02 billion (US$159.6 million) in 2021, representing an increase of 52.0% from RMB669.3 million in 2020. Non-GAAP income from operations was RMB84.0 million (US$13.2 million) in 2021, compared with RMB526.5 million Non-GAAP loss from operations in 2020.

 

Net Income/Loss and Net Earnings/Loss Per Share

 

·Net loss was RMB321.5 million (US$50.4 million) in 2021, representing an increase of 111.9% from RMB151.7 million in 2020. Non-GAAP net income was RMB779.9 million (US$122.4 million) in 2021, compared with RMB281.2 million Non-GAAP net loss in 2020.

 

·Basic and diluted loss per ADS attributable to ordinary shareholders were both RMB0.35 (US$0.05) in 2021. Non-GAAP basic and diluted net earnings per ADS attributable to ordinary shareholders were RMB0.84 (US$0.13) and RMB0.81 (US$0.13), respectively in 2021. As of December 31, 2021, the Company had 1,929,562,426 ordinary shares outstanding.

 

Operating Cash Flow and Free Cash Flow

 

·Operating cash flow was RMB8.34 billion (US$1.31 billion) in 2021, representing an increase of 165.6% from RMB3.14 billion in 2020.

 

·Free cash flow was RMB4.33 billion (US$679.9 million) in 2021, representing an increase of 75.8% from RMB2.46 billion in 2020.

 

Employees

 

·As of December 31, 2021, the Company had a total of 11,901 employees.

 

8

 

 

Business Outlook

 

For the first quarter of 2022, the Company expects:

 

·Deliveries of vehicles to be between 30,000 and 32,000 vehicles, representing an increase of 138.5% to 154.4% from the first quarter of 2021.

 

·Total revenues to be between RMB8.84 billion (US$1.39 billion) and RMB9.43 billion (US$1.48 billion), representing an increase of 147.2% to 163.7% from the first quarter of 2021.

 

This business outlook reflects the Company’s current and preliminary view on the business situation and market condition, which is subject to change.

 

Conference Call

 

Management will hold a conference call at 7:30 a.m. U.S. Eastern Time on Friday, February 25, 2022 (8:30 p.m. Beijing Time on February 25, 2022) to discuss financial results and answer questions from investors and analysts.

 

For participants who wish to join the call, please complete online registration using the link provided below at least 20 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, Direct Event passcode, a unique registrant ID and an e-mail with detailed instructions to join the conference call.

 

Participant Online Registration: http://apac.directeventreg.com/registration/event/8046297

 

A replay of the conference call will be accessible through March 6, 2022, by dialing the following numbers:

 

United States: +1-855-452-5696
Mainland China: +86-400-602-2065
Hong Kong, China: +852-3051-2780
International: +61-2-8199-0299
Conference ID: 8046297

 

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.lixiang.com.

 

9

 

 

Non-GAAP Financial Measure

 

The Company uses Non-GAAP measures, such as Non-GAAP income/loss from operations, Non-GAAP net income/loss, Non-GAAP basic and diluted net earnings/loss per ADS attributable to ordinary shareholders and free cash flow, in evaluating its operating results and for financial and operational decision-making purposes. By excluding the impact of share-based compensation expenses, changes in fair value of warrants and derivative liabilities, accretion on convertible redeemable preferred shares to redemption value and the effect of exchange rate changes on convertible redeemable preferred shares, the Company believes that the Non-GAAP financial measures help identify underlying trends in its business and enhance the overall understanding of the Company’s past performance and future prospects. The Company also believes that the Non-GAAP financial measures allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

 

The Non-GAAP financial measures are not presented in accordance with U.S. GAAP and may be different from Non-GAAP methods of accounting and reporting used by other companies. The Non-GAAP financial measures have limitations as analytical tools and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for net loss or other consolidated statements of comprehensive loss data prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

 

The Company mitigates these limitations by reconciling the Non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

 

For more information on the Non-GAAP financial measures, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

 

About Li Auto Inc.

 

Li Auto Inc. is an innovator in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is to create homes on the move that bring happiness to the entire family (“创造移动的家,创造幸福的家”). Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer to successfully commercialize extended-range electric vehicles in China. Its first model, Li ONE, is a six-seat, large premium smart electric SUV. The Company started volume production of Li ONE in November 2019 and released the 2021 Li ONE in May 2021. The Company leverages technology to create value for its users. It concentrates its in-house development efforts on its proprietary range extension system, next-generation electric vehicle technology, and smart vehicle solutions. Beyond Li ONE, the Company will expand its product line by developing new vehicles, including BEVs and EREVs, to target a broader consumer base.

 

For more information, please visit: http://ir.lixiang.com.

 

10

 

 

Safe Harbor Statement

 

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Li Auto may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and The Stock Exchange of Hong Kong Limited (the “HKEX”), in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Li Auto’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Li Auto’s strategies, future business development, and financial condition and results of operations; Li Auto’s limited operating history; risks associated with extended-range electric vehicles, Li Auto’s ability to develop, manufacture, and deliver vehicles of high quality and appeal to customers; Li Auto’s ability to generate positive cash flow and profits; product defects or any other failure of vehicles to perform as expected; Li Auto’s ability to compete successfully; Li Auto’s ability to build its brand and withstand negative publicity; cancellation of orders for Li Auto’s vehicles; Li Auto’s ability to develop new vehicles; and changes in consumer demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Li Auto’s filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and Li Auto does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

For investor and media inquiries, please contact:

 

Li Auto Inc.

Investor Relations

Email: ir@lixiang.com

 

The Piacente Group, Inc.

Yang Song

Tel: +86-10-6508-0677

Email: Li@tpg-ir.com

 

Brandi Piacente

Tel: +1-212-481-2050

Email: Li@tpg-ir.com

 

11

 

 

Li Auto Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)

 

(All amounts in thousands, except for ADS/ordinary share and per ADS/ordinary share data)

 

   For the Three Months Ended   For the Year Ended 
   December 31,
2020
  

September 30,

2021

   December 31,
2021
   December 31,
2021
   December 31,
2020
   December 31,
2021
   December 31,
2021
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Revenues:                            
Vehicle sales   4,057,737    7,385,785    10,375,716    1,628,176    9,282,703    26,128,469    4,100,127 
Other sales and services   89,160    389,389    244,736    38,404    173,906    881,310    138,297 
Total revenues   4,146,897    7,775,174    10,620,452    1,666,580    9,456,609    27,009,779    4,238,424 
Cost of sales:                                   
Vehicle sales   (3,362,111)   (5,830,322)   (8,057,653)   (1,264,422)   (7,763,628)   (20,755,578)   (3,257,003)
Other sales and services   (60,189)   (132,890)   (182,820)   (28,688)   (143,642)   (492,747)   (77,323)
Total cost of sales   (3,422,300)   (5,963,212)   (8,240,473)   (1,293,110)   (7,907,270)   (21,248,325)   (3,334,326)
Gross profit   724,597    1,811,962    2,379,979    373,470    1,549,339    5,761,454    904,098 
Operating expenses:                                   
Research and development   (374,200)   (888,460)   (1,229,991)   (193,012)   (1,099,857)   (3,286,389)   (515,706)
Selling, general and administrative   (429,335)   (1,021,299)   (1,125,885)   (176,676)   (1,118,819)   (3,492,385)   (548,031)
Total operating expenses   (803,535)   (1,909,759)   (2,355,876)   (369,688)   (2,218,676)   (6,778,774)   (1,063,737)
(Loss)/Income from operations   (78,938)   (97,797)   24,103    3,782    (669,337)   (1,017,320)   (159,639)
Other (expense)/income:                                   
Interest expense   (13,123)   (19,236)   (9,685)   (1,520)   (66,916)   (63,244)   (9,924)
Interest income and investment income, net   169,284    150,123    179,315    28,138    254,916    740,432    116,190 
Changes in fair value of warrants and derivative liabilities                   272,327         
Others, net   7,477    67,595    89,037    13,972    20,133    187,320    29,395 
Income/(Loss) before income tax expense   84,700    100,685    282,770    44,372    (188,877)   (152,812)   (23,978)
Income tax benefit/(expense)   22,847    (122,195)   12,741    1,999    22,847    (168,643)   (26,464)
Net income/(loss) from continuing operations   107,547    (21,510)   295,511    46,371    (166,030)   (321,455)   (50,442)

Net income from discontinued operations, net of tax

                   14,373         
Net income/(loss)   107,547    (21,510)   295,511    46,371    (151,657)   (321,455)   (50,442)
Accretion on convertible redeemable preferred shares to redemption value                   (651,190)        
Effect of exchange rate changes on convertible redeemable preferred shares                   10,862         
Net income/(loss) attributable to ordinary shareholders   107,547    (21,510)   295,511    46,371    (791,985)   (321,455)   (50,442)
                                    
Net income/(loss)   107,547    (21,510)   295,511    46,371    (151,657)   (321,455)   (50,442)
Other comprehensive (loss)/income                                   
Foreign currency translation adjustment, net of nil tax   (642,349)   53,965    (372,067)   (58,385)   (1,020,728)   (516,687)   (81,079)
Total other comprehensive (loss)/income   (642,349)   53,965    (372,067)   (58,385)   (1,020,728)   (516,687)   (81,079)
Total comprehensive (loss)/income   (534,802)   32,455    (76,556)   (12,014)   (1,172,385)   (838,142)   (131,521)
Accretion on convertible redeemable preferred shares to redemption value                   (651,190)        
Effect of exchange rate changes on convertible redeemable preferred shares                   10,862         
Comprehensive (loss)/income attributable to ordinary shareholders   (534,802)   32,455    (76,556)   (12,014)   (1,812,713)   (838,142)   (131,521)
Weighted average number of ADSs                                   
Basic   863,519,155    933,507,739    962,726,533    962,726,533    435,001,639    926,660,224    926,660,224 
Diluted   891,416,573    933,507,739    1,027,358,848    1,027,358,848    435,001,639    926,660,224    926,660,224 
Net earnings/(loss) per ADS attributable to ordinary shareholders                                   
Basic   0.12    (0.02)   0.31    0.05    (1.82)   (0.35)   (0.05)
Diluted   0.12    (0.02)   0.29    0.05    (1.82)   (0.35)   (0.05)
Weighted average number of ordinary shares                                   
Basic   1,727,038,310    1,867,015,478    1,925,453,066    1,925,453,066    870,003,278    1,853,320,448    1,853,320,448 
Diluted   1,782,833,146    1,867,015,478    2,054,717,696    2,054,717,696    870,003,278    1,853,320,448    1,853,320,448 
Net earnings/(loss) per share attributable to ordinary shareholders                                   
Basic   0.06    (0.01)   0.15    0.02    (0.91)   (0.17)   (0.03)
Diluted   0.06    (0.01)   0.15    0.02    (0.91)   (0.17)   (0.03)

 

12

 

       

Li Auto Inc.

Unaudited Condensed Consolidated Balance Sheets

 

(All amounts in thousands)

 

   As of 
   December 31,
2020
   December 31,
2021
   December 31,
2021
 
   RMB   RMB   US$ 
ASSETS            
Current assets:               
Cash and cash equivalents   8,938,341    27,854,224    4,370,936 
Restricted cash   1,234,178    2,638,840    414,092 
Time deposits and short-term investments   19,701,382    19,668,239    3,086,376 
Trade receivable   115,549    120,541    18,916 
Inventories   1,048,004    1,617,890    253,882 
Prepayments and other current assets   353,655    480,680    75,429 
Total current assets   31,391,109    52,380,414    8,219,631 
Non-current assets:               
Long-term investments   162,853    156,306    24,528 
Property, plant and equipment, net   2,478,687    4,498,269    705,877 
Operating lease right-of-use assets, net   1,277,006    2,061,492    323,493 
Intangible assets, net   683,281    751,460    117,920 
Deferred tax assets   59,156    19,896    3,122 
Other non-current assets   321,184    1,981,076    310,872 
Total non-current assets   4,982,167    9,468,499    1,485,812 
Total assets   36,373,276    61,848,913    9,705,443 
LIABILITIES AND EQUITY               
Current liabilities:               
Short-term borrowings       37,042    5,813 
Trade and notes payable   3,160,515    9,376,050    1,471,307 
Amounts due to related parties   19,206    37,455    5,878 
Deferred revenue, current   271,510    305,092    47,876 
Operating lease liabilities, current   210,531    473,245    74,262 
Accruals and other current liabilities   647,459    1,879,368    294,914 
Total current liabilities   4,309,221    12,108,252    1,900,050 
Non-current liabilities:               
Long-term borrowings   511,638    5,960,899    935,395 
Deferred revenue, non-current   135,658    389,653    61,145 
Operating and finance lease liabilities, non-current   1,392,136    1,369,825    214,955 
Deferred tax liabilities   36,309    153,723    24,122 
Other non-current liabilities   184,717    802,259    125,891 
Total non-current liabilities   2,260,458    8,676,359    1,361,508 
Total liabilities   6,569,679    20,784,611    3,261,558 
Total shareholders’ equity   29,803,597    41,064,302    6,443,885 
Total liabilities and shareholders’ equity   36,373,276    61,848,913    9,705,443 
                

 

13

 

 

Li Auto Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

 

(All amounts in thousands)

 

   For the Three Months Ended   For the Year Ended 
  

December 31,

2020

  

September 30,

2021

  

December 31,

2021

  

December 31,

2021

  

December 31,

2020

  

December 31,

2021

  

December 31,

2021

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net cash provided by operating activities   1,821,341    2,169,517    3,836,898    602,093    3,139,804    8,340,385    1,308,788 
Net cash (used in)/provided by investing activities   (8,300,693)   6,962,534    (7,109,624)   (1,115,655)   (18,737,725)   (4,257,244)   (668,054)
Net cash provided by financing activities   9,990,955    11,010,741    165,030    25,897    24,710,697    16,709,533    2,622,090 
Effect of exchange rate changes   (149,910)   (8,659)   (360,431)   (56,559)   (376,646)   (472,129)   (74,086)
Net change in cash, cash equivalents and restricted cash   3,361,693    20,134,133    (3,468,127)   (544,224)   8,736,130    20,320,545    3,188,738 
Cash, cash equivalents and restricted cash at beginning of period   6,810,826    13,827,058    33,961,191    5,329,252    1,436,389    10,172,519    1,596,290 
Cash, cash equivalents and restricted cash at end of period   10,172,519    33,961,191    30,493,064    4,785,028    10,172,519    30,493,064    4,785,028 
                                    
Net cash provided by operating activities   1,821,341    2,169,517    3,836,898    602,093    3,139,804    8,340,385    1,308,788 
Capital expenditures   (222,228)   (1,004,543)   (2,221,529)   (348,606)   (675,187)   (4,007,691)   (628,894)
Free cash flow   1,599,113    1,164,974    1,615,369    253,487    2,464,617    4,332,694    679,894 

 

14

 

 

Li Auto Inc.

Unaudited Reconciliation of GAAP and Non-GAAP Results

 

(All amounts in thousands, except for ADS/ordinary share and per ADS/ordinary share data)

 

   For the Three Months Ended   For the Year Ended 
  

December 31,

2020

  

September 30,

2021

  

December 31,

2021

  

December 31,

2021

  

December 31,

2020

  

December 31,

2021

  

December 31,

2021

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
(Loss)/Income from operations   (78,938)   (97,797)   24,103    3,782    (669,337)   (1,017,320)   (159,639)
Shared-based compensation expenses   7,862    357,181    390,856    61,333    142,795    1,101,356    172,827 
Non-GAAP (loss)/income from operations   (71,076)   259,384    414,959    65,115    (526,542)   84,036    13,188 
                                    
Net income/(loss)   107,547    (21,510)   295,511    46,371    (151,657)   (321,455)   (50,442)
Shared-based compensation expenses   7,862    357,181    390,856    61,333    142,795    1,101,356    172,827 
Changes in fair value of warrants and derivative liabilities                   (272,327)        
Non-GAAP net income/(loss)   115,409    335,671    686,367    107,704    (281,189)   779,901    122,385 
                                    
Net income/(loss) attributable to ordinary shareholders   107,547    (21,510)   295,511    46,371    (791,985)   (321,455)   (50,442)
Shared-based compensation expenses   7,862    357,181    390,856    61,333    142,795    1,101,356    172,827 
Changes in fair value of warrants and derivative liabilities                   (272,327)        
Accretion on convertible redeemable preferred shares to redemption value                   651,190         
Effect of exchange rate changes on convertible redeemable preferred shares                   (10,862)        

Non-GAAP net income/(loss) attributable to ordinary shareholders

   115,409    335,671    686,367    107,704    (281,189)   779,901    122,385 
                                    
Weighted average number of ADSs (Non-GAAP)                                   
Basic   863,519,155    933,507,739    962,726,533    962,726,533    435,001,639    926,660,224    926,660,224 
Diluted   891,416,573    1,000,412,702    1,027,358,848    1,027,358,848    435,001,639    985,482,839    985,482,839 
Non-GAAP net earnings/(loss) per ADS attributable to ordinary shareholders                                   
Basic   0.13    0.36    0.71    0.11    (0.65)   0.84    0.13 
Diluted   0.13    0.34    0.68    0.11    (0.65)   0.81    0.13 
Weighted average number of ordinary shares (Non-GAAP)                                   
Basic   1,727,038,310    1,867,015,478    1,925,453,066    1,925,453,066    870,003,278    1,853,320,448    1,853,320,448 
Diluted   1,782,833,146    2,000,825,404    2,054,717,696    2,054,717,696    870,003,278    1,970,965,679    1,970,965,679 
Non-GAAP net earnings/(loss) per share attributable to ordinary shareholders7                                   
Basic   0.07    0.18    0.36    0.06    (0.33)   0.42    0.07 
Diluted   0.06    0.17    0.34    0.05    (0.33)   0.41    0.06 

 

 

7 Non-GAAP basic net earnings/loss per ordinary share attributable to ordinary shareholders is calculated by dividing Non-GAAP net income/loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the periods. Non-GAAP diluted net earnings/loss per ordinary share attributable to ordinary shareholders is calculated by dividing Non-GAAP net income/loss attributable to ordinary shareholders by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the periods, including the dilutive effects of convertible redeemable preferred shares and convertible senior notes as determined under the if-converted method, and dilutive effect of share-based awards as determined under the treasury stock method.

 

15

 

 

Exhibit 99.3

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

Li Auto Inc.

理  想  汽  車

(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)

(Stock Code: 2015)

 

ANNUAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED DECEMBER 31, 2021

 

The board (the “Board”) of directors (the “Directors”) of Li Auto Inc. (the “Company”) is pleased to announce the unaudited annual consolidated results of the Company for the year ended December 31, 2021 (the “Reporting Period”), together with the comparative figures for the corresponding period in 2020. These annual results have been prepared under generally accepted accounting principles in the United States (the “U.S. GAAP”) and reviewed by the audit committee (the “Audit Committee”) of the Board.

 

In this announcement, “we,” “us,” and “our” refer to the Company and where the context otherwise requires, the Group (as defined under the “General Information” section).

 

1 

 

 

FINANCIAL PERFORMANCE HIGHLIGHTS

 

   For the Year Ended
December 31,
     
   2020   2021   Change (%) 
   (RMB in thousands, except percentages) 
     
Revenues   9,456,609    27,009,779    185.6%
Gross profit   1,549,339    5,761,454    271.9%
Loss from operations   (669,337)   (1,017,320)   52.0%
Loss before income tax   (188,877)   (152,812)   (19.1%)
Net loss   (151,657)   (321,455)   112.0%
Comprehensive loss attributable to the ordinary shareholders of Li Auto Inc.   (1,812,713)   (838,142)   (53.8%)
Non-GAAP Financial Measures:               
Non-GAAP (loss)/income from operations   (526,542)   84,036    N/A 
Non-GAAP net (loss)/income   (281,189)   779,901    N/A 

 

2 

 

 

Non-GAAP Financial Measures

 

The Company uses Non-GAAP financial measures, such as Non-GAAP (loss)/income from operations and Non-GAAP net (loss)/income, in evaluating its operating results and for financial and operational decision-making purposes. By excluding the impact of share-based compensation expenses and changes in fair value of warrants and derivative liabilities, the Company believes that the Non-GAAP financial measures help identify underlying trends in its business and enhance the overall understanding of the Company’s past performance and future prospects. The Company also believes that the Non-GAAP financial measures allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

 

The Non-GAAP financial measures are not presented in accordance with U.S. GAAP and may be different from Non-GAAP methods of accounting and reporting used by other companies. The Non-GAAP financial measures have limitations as analytical tools and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for net loss or other consolidated statements of comprehensive loss data prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

 

The Company mitigates these limitations by reconciling the Non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

 

The following table sets forth unaudited reconciliation of GAAP and non-GAAP results for the period indicated.

 

   For the Year Ended,
December 31,
 
   2020   2021 
   (RMB in thousands) 
     
Loss from operations   (669,337)   (1,017,320)
Shared-based compensation expenses   142,795    1,101,356 
           
Non-GAAP (loss)/income from operations   (526,542)   84,036 
           
Net loss   (151,657)   (321,455)
Shared-based compensation expenses   142,795    1,101,356 
Changes in fair value of warrants and derivative liabilities   (272,327)    
           
Non-GAAP net (loss)/income   (281,189)   779,901 

 

3 

 

 

BUSINESS REVIEW AND OUTLOOK

 

Business review for the Reporting Period

 

We have achieved strong business performance in 2021 which demonstrated the competitive strength and appeal of Li ONE to our customers. Despite the impact of industry-wide supply chain shortages and the COVID-19 pandemic, our total deliveries of Li ONE in 2021 increased 177.4% year over year to 90,491 vehicles and our total revenues amounted to RMB27.01 billion, representing a 185.6% year-over-year increase. The cumulative deliveries of Li ONE since its market debut have reached 124,088 vehicles as of the end of 2021, demonstrating our users’ endorsement of the brand-new in-vehicle driving and riding experience Li ONE offers in this era of autonomous technology.

 

During the reporting period, we remained dedicated to serving the mobility needs of families in China by continually optimizing products and services, accelerating the expansion of direct sales and servicing network, and increasing the investment in autonomous driving and smart cabin technologies while always prioritizing user safety and experience.

 

Product

 

We believe that automotive technologies will continue to evolve, and as new technologies enable us to create more compelling products to address users’ needs, we will continue to evolve our products, aiming to provide our users with greater safety, convenience, and comfort.

 

On May 25, 2021, we released the 2021 Li ONE, which is equipped with navigation on ADAS (NOA) as a standard configuration and features comprehensive upgrades, including an enhanced NEDC range of 1,080 kilometers, optimized travel comfort, and more intelligent cockpit. Through the release of the 2021 Li ONE, we have brought these premium features to our users at a selling price of RMB338,000.

 

In November 2021, Li ONE became the first domestic branded model priced above RMB300,000 to achieve the 10,000 monthly deliveries. We believe this is another milestone for Li ONE to qualify as a blockbuster model.

 

We continuously optimize our product through OTA releases. In September and December 2021, we upgraded the smart in-car voice assistant, Li Xiang Tong Xue (理想同學). In September, we launched a new application store via an OTA update. The upgrade in December 2021 also featured the NOA and vision-enhanced Automatic Emergency Braking (AEB) functions.

 

4 

 

 

Direct Sales and Servicing Network

 

Our direct sales and servicing network is an integral component of our closed-loop, integrated online and offline platform, which provides users with superior purchasing experiences consistent with our values and brand image and offers us with profound consumer insights as we constantly pursue improvement of products and services.

 

In 2021, we significantly expanded our direct sales and servicing network, almost quadrupling the number of retail stores. We aim to provide our users with a more convenient, efficient and pleasant purchasing and user experience by strengthening our online operations, as well as continuously adding physical touchpoints close to our users. We plan to further enlarge our footprint in 2022 to cater to user demand growth and capture an increasing NEV market share.

 

As of December 31, 2021, we had 206 retail stores in 102 cities, as well as 278 servicing centers and Li Auto-authorized body and paint shops operating in 204 cities.

 

Research and Development

 

We regard our strong research and development capabilities as the core competency to establish and strengthen our market position. In 2021, we made good progress in developing the upgraded EREV platform and high-power charging BEV platforms and optimizing our autonomous driving and smart cabin solutions leveraging full-stack proprietary software development capabilities.

 

With the release of NOA and vision-enhanced AEB functions for the 2021 Li ONE in December, we became the third automaker in the world capable of full-stack self-development of NOA. During a recent third-party AEB test, Li ONE was ranked No. 1 and was the only assessed model capable of accurately identifying crossing vehicles and two-wheelers. Both of the achievements demonstrated our strong ADAS research and development capabilities.

 

Manufacturing Base

 

We are adopting the advanced production technology for our production lines, expanding our capacity at the Changzhou factory, constructing our Beijing manufacturing base and having established a strategic cooperation framework agreement with the local government to build Chongqing manufacturing base.

 

Beijing Manufacturing Base

 

In October 2021, we officially commenced construction of our Beijing manufacturing base which is scheduled to be operational in 2023. It will serve as an important manufacturing base for premium BEVs, allowing us to meet rising market demand with a more diversified product lineup.

 

Aligned with our ESG goals, the Beijing manufacturing base will be built on and leverage the existing site’s infrastructure to achieve high reutilization. It will also adopt leading environmentally friendly production processes in addition to being highly automated, intelligent, and flexible.

 

5 

 

 

Changzhou Manufacturing Base

 

In November 2021, we acquired from Changzhou Wunan New Energy Vehicle Investment Co., Ltd. 100% of the equity interest in Changzhou Chehejin Standard Factory Construction Co., Ltd. (“Chehejin”), which owns the land use rights and plants that previously had been leased to us for the current Changzhou manufacturing base. This transaction strengthens our control of the Changzhou manufacturing base.

 

Chongqing Manufacturing Base

 

In December 2021, we agreed to establish a strategic cooperation framework agreement with the Chongqing municipal government to build our Chongqing manufacturing base in the Liangjiang New Area. The addition of this manufacturing base will further enhance our ability to meet increasingly strong market demand and cement the foundation for continued growth.

 

Recent developments after the Reporting Period

 

In January 2022, we delivered 12,268 Li ONEs, representing a 128.1% increase from January 2021.

 

As of January 31, 2022, we had 220 retail stores covering 105 cities, in addition to 276 servicing centers and Li Auto-authorized body and paint shops operating in 204 cities.

 

Business outlook

 

Looking ahead to 2022, in the second quarter, we plan to release our next model, a full-size premium extended-range electric SUV with next generation EREV powertrain system and innovative smart cabin and autonomous driving technology, which will further enhance families’ in-vehicle driving and riding experience. We are also developing our BEV models which will support ultra-fast charging and will provide users with an extraordinary battery charging experience in terms of charging time. We will also remain focused on investing in the R&D of smart cabin and autonomous driving with a goal to further elevate our capabilities to provide our users with products and services that offer greater safety, convenience and comfort, creating homes on the move that bring happiness to the entire family.

 

Additionally, challenges to the overall NEV supply chain will likely become a prolonged and industry-wide obstacle, affecting the supply of chips, batteries and potentially other auto parts given the continuous accelerating development of the NEV industry may soon outpace the expansion of production capacity of our supply chain partners. Going forward, we will continue to collaborate closely with these supply chain partners to mitigate such risks.

 

6 

 

 

  

MANAGEMENT DISCUSSION AND ANALYSIS

 

  

For the Year Ended

December 31,

 
   2020   2021 
   (RMB in thousands) 
         
Revenues:          
 Vehicle sales   9,282,703    26,128,469 
 Other sales and services   173,906    881,310 
           
Total revenues   9,456,609    27,009,779 
           
Cost of sales:          
 Vehicle sales   (7,763,628)   (20,755,578)
 Other sales and services   (143,642)   (492,747)
           
Total cost of sales   (7,907,270)   (21,248,325)
           
Gross profit   1,549,339    5,761,454 
           
Operating expenses:          
 Research and development   (1,099,857)   (3,286,389)
 Selling, general and administrative   (1,118,819)   (3,492,385)
           
Total operating expenses   (2,218,676)   (6,778,774)
           
Loss from operations   (669,337)   (1,017,320)
Other (expense)/income:          
 Interest expense   (66,916)   (63,244)
 Interest income and investment income, net   254,916    740,432 
 Changes in fair value of warrants and derivative liabilities   272,327     
 Others, net   20,133    187,320 
           
Loss before income tax expense   (188,877)   (152,812)
 Income tax benefit/(expense)   22,847    (168,643)
           
Net loss from continuing operations   (166,030)   (321,455)
Net income from discontinued operations, net of tax   14,373     
           
Net loss   (151,657)   (321,455)
           
Other comprehensive loss, net of tax          
 Foreign currency translation adjustment, net of tax   (1,020,728)   (516,687)
           
Total comprehensive loss, net of tax   (1,172,385)   (838,142)
           
 Accretion on convertible redeemable preferred shares to redemption value   (651,190)    
           
 Effect of exchange rate changes on convertible redeemable preferred shares   10,862     
           
Comprehensive loss attributable to ordinary shareholders of Li Auto Inc.   (1,812,713)   (838,142)

 

7 

 

 

Revenue

 

Total revenue increased by 185.6% from RMB9.46 billion for the year ended December 31, 2020 to RMB27.01 billion for the year ended December 31, 2021.

 

Revenue from vehicle sales increased by 181.5% from RMB9.28 billion for the year ended December 31, 2020 to RMB26.13 billion for the year ended December 31, 2021, primarily attributable to the increased deliveries in 2021.

 

Revenue from other sales and services increased by 406.8% from RMB173.9 million for the year ended December 31, 2020 to RMB881.3 million for the year ended December 31, 2021, primarily attributable to increased sales of charging stalls, accessories and services in line with higher accumulated vehicle sales, and the sales of automotive regulatory credits.

 

Cost of Sales

 

Cost of sales increased by 168.7% from RMB7.91 billion for the year ended December 31, 2020 to RMB21.25 billion for the year ended December 31, 2021, in line with revenue growth, which was mainly driven by the increase in vehicle deliveries in 2021.

 

Gross Profit and Gross Margin

 

As a result of the foregoing, gross profit increased by 271.9% from RMB1.55 billion for the year ended December 31, 2020 to RMB5.76 billion for the year ended December 31, 2021. The increase in gross margin from 16.4% for the year ended December 31, 2020 to 21.3% for the year ended December 31, 2021 was mainly driven by the increase of vehicle margin over previous year.

 

Vehicle margin increased from 16.4% for the year ended December 31, 2020 to 20.6% for the year ended December 31, 2021 primarily driven by improved cost control in supply chain management and higher average selling price attributable to the increase of vehicle deliveries in 2021, with the launch of the 2021 Li ONE in May 2021.

 

Research and Development Expenses

 

Research and development expenses increased by 198.8% from RMB1.10 billion for the year ended December 31, 2020 to RMB3.29 billion for the year ended December 31, 2021, primarily attributable to increased employee compensation as a result of growing number of research and development staff as well as increased costs associated with new products developments.

 

8 

 

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses increased by 212.1% from RMB1.12 billion for the year ended December 31, 2020 to RMB3.49 billion for the year ended December 31, 2021, driven by increased employee compensation as a result of growing number of staff, as well as increased marketing and promotional activities and rental expenses associated with the expansion of the Company’s sales network.

 

Loss from Operations

 

As a result of the foregoing, loss from operation increased by 52.0% from RMB669.3 million for the year ended December 31, 2020 to RMB1.02 billion for the year ended December 31, 2021.

 

Interest income and investment income, Net

 

Interest income and investment income, net increased by 190.5% from RMB254.9 million for the year ended December 31, 2020 to RMB740.4 million for the year ended December 31, 2021, primarily attributable to a significant expansion in the scale of our investment in wealth management products.

 

Change in fair value of warrants and derivative liabilities

 

We recorded RMB272.3 million fair value gain of warrants and derivative liabilities for the year ended December 31, 2020, and these warrants and derivative liabilities were expired or exercised upon the completion of the initial public offering in the United States in July 2020.

 

Net loss

 

As a result of the foregoing, net loss increased by 112.0% from RMB151.7 million for the year ended December 31, 2020 to RMB321.5 million for the year ended December 31, 2021.

 

Liquidity and Source of Funding and Borrowing

 

As at December 31, 2021, cash and cash equivalents, restricted cash, time deposits and short-term investment increased by 67.9% from RMB29.87 billion as at December 31, 2020, to RMB50.16 billion. The increase is primarily attributable to the offering of US$862.5 million convertible senior notes due 2028 in April 2021 and the net proceeds of HK$13.27 billion from the initial public offering in Hong Kong in August 2021.

 

Significant Investments

 

The Company did not make or hold any significant investments during the year ended December 31, 2021.

 

9 

 

 

Material Acquisitions and Disposals

 

In November 2021, the Company acquired from Changzhou Wunan New Energy Vehicle Investment Co., Ltd. 100% of the equity interest in Changzhou Chehejin Standard Factory Construction Co., Ltd. (“Chehejin”), which owns the land use rights and plants that previously had been leased to the Company for the current Changzhou manufacturing base. This transaction strengthens the Company’s control of the Changzhou manufacturing base.

 

Pledge of Assets

 

As of December 31, 2021, we pledged a restricted deposit of RMB2.64 billion, compared with RMB1.23 billion as of December 31, 2020. We also had secured certain production equipment amounting to RMB470.5 million for borrowings as of December 31, 2021.

 

Gearing Ratio

 

As at December 31, 2021, the Company’s gearing ratio (i.e. total liabilities divided by total assets, in percentage) was 33.6% (as at December 31, 2020: 18.1%).

 

Foreign Exchange Exposure

 

Our expenditures are mainly denominated in Renminbi and, therefore, we are exposed to risks related to movements between Renminbi and U.S. dollars. Our exposure to U.S. dollars exchange rate fluctuation arises from the Renminbi-denominated cash and cash equivalents, restricted cash, time deposits, and short-term investments held by us and our subsidiaries whose functional currency is U.S. dollars, and the U.S. dollar-denominated cash and cash equivalents, restricted cash, time deposits, and short-term investments held by our subsidiaries whose functional currency is Renminbi. We enter into hedging transactions in an effort to reduce our exposure to foreign currency exchange risk when we deem appropriate. To the extent that we need to convert U.S. dollars or other currencies into Renminbi for our operations, appreciation of Renminbi against U.S. dollars would have an adverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars or other currency for the purpose of making payments to suppliers or for dividends on our Class A ordinary shares or ADSs or for other business purposes, appreciation of U.S. dollars against Renminbi would have a negative effect on the U.S. dollar amounts available to us.

 

Contingent Liabilities

 

The Company had no material contingent liabilities as at December 31, 2021.

 

Capital Commitment

 

For the year ended December 31, 2021, capital commitment of the Company was RMB2.92 billion (for the year ended December 31, 2020: RMB259.2 million), mainly on construction and purchase of production facilities, equipment and tooling.

 

10 

 

 

Employees and Remuneration

 

As at December 31, 2021, the Company had a total of 11,901 employees. The following table sets forth the total number of employees by function as of December 31, 2021:

 

Function 

As of

December 31,

2021

    
Research and Development  3,415
Production  1,880
Sales and Marketing  6,019
General and Administrative Support  587
    
Total  11,901

 

The Company also has adopted a post-IPO share option scheme and a share award scheme.

 

CORPORATE GOVERNANCE

 

The Board is committed to achieving high corporate governance standards. The Board believes that high corporate governance standards are essential in providing a framework for the Company to safeguard the interests of shareholders and to enhance corporate value and accountability.

 

Compliance with the Code on Corporate Governance Practices

 

After the Listing, we have complied with all the code provisions of the Corporate Governance Code set forth in Appendix 14 to the Listing Rules (the “Corporate Governance Code”), save for the following.

 

Code provision C.2.1 of the Corporate Governance Code, recommends, but does not require, that the roles of chairman and chief executive officer should be separate and should not be performed by the same person. The Company deviates from this provision because Mr. Li Xiang (“Mr. Li”) performs both the roles of the chairman of the Board and the chief executive officer of the Company. Mr. Li is our founder and has extensive experience in our business operations and management. Our Board believes that vesting the roles of both chairman and chief executive officer to Mr. Li has the benefit of ensuring consistent leadership within our Company and enables more effective and efficient overall strategic planning. This structure will enable our Company to make and implement decisions promptly and effectively.

 

11 

 

 

Our Board considers that the balance of power and authority will not be impaired due to this arrangement. In addition, all major decisions are made in consultation with members of the Board, including the relevant Board committees, and three independent non-executive Directors. Our Board will reassess the division of the roles of chairman and the chief executive officer from time-to-time, and may recommend dividing the two roles between different people in the future, taking into account the circumstances of our Company as a whole.

 

Compliance with the Model Code for Securities Transactions by Directors

 

The class A ordinary shares of the Company (“Class A Ordinary Shares”) were only listed on the Stock Exchange on August 12, 2021, since which time the Model Code has been applicable to the Company.

 

The Company has adopted the Management Trading of Securities Policy (the “Code”), with terms no less exacting that the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, as its own securities dealing code to regulate all dealings by Directors and relevant employees of securities in the Company and other matters covered by the Code.

 

Specific enquiry has been made of all the Directors and the relevant employees and they have confirmed that they have complied with the Code since the Listing Date up to the date of this announcement.

 

BOARD COMMITTEES

 

The Board has established three committees, namely, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, for overseeing particular aspects of the Company’s affairs. Each of these committees is established with defined written terms of reference. The terms of reference of the Board committees are available on the websites of the Company and the Stock Exchange.

 

Audit Committee

 

The Company has established an Audit Committee in compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code.

 

The primary duties of the Audit Committee are to review and supervise the financial reporting process and the risk management and internal control systems of the Company, review and approve connected transactions and provide advice and comments to the Board.

 

The Audit Committee comprises three independent non-executive Directors, being Mr. Jiang Zhenyu, Prof. Xiao Xing, Mr. Zhao Hongqiang (being the Company’s independent non-executive Director with the appropriate professional qualifications) as the chairman of the Audit Committee.

 

12 

 

 

The Audit Committee has reviewed the unaudited annual results of the Company for the year ended December 31, 2021 and has met with the independent auditor, PricewaterhouseCoopers. The Audit Committee has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control and financial reporting matters with senior management members of the Company.

 

The unaudited financial information disclosed in this announcement is preliminary. The audit of the financial statements and related notes to be included in the Company’s annual report to shareholders for the year ended December 31, 2021 is still in progress. The figures in respect of the Company’s unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of comprehensive loss, unaudited condensed consolidated statements of cash flows and the related notes thereto for the year ended December 31, 2021 as set out in the preliminary announcement have been agreed by the Company’s auditor, PricewaterhouseCoopers, to the amounts set out in the Company’s draft consolidated financial statements for the year. The work performed by PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by PricewaterhouseCoopers on the preliminary announcement.

 

Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between the Company’s audited financial statements and this preliminary unaudited financial information.

 

Compensation Committee

 

The Company has established a Compensation Committee in compliance with Rule 3.25 of the Listing Rules and the Corporate Governance Code.

 

The primary duties of the Compensation Committee are to review and make recommendations to the Board with respect to director compensation, evaluate the performance of our chief executive officer and chief financial officer and review and make recommendations to the Board regarding the terms of their compensation, and review and approve the compensation of our other executive officers and senior management. The Compensation Committee comprises three Directors, being Mr. Li, Mr. Zhao Hongqiang and Mr. Jiang Zhenyu, with Mr. Zhao as the chairman of the Compensation Committee.

 

Nominating and Corporate Governance Committee

 

The Company has established a Nominating and Corporate Governance Committee in compliance with the Corporate Governance Code and Rule 3.27A and Rule 8A.30 of the Listing Rules.

 

The primary duties of the Nominating and Corporate Governance Committee were, among other things, in respect of its nomination functions, to develop and recommend to the Board criteria for board and committee membership, recommend to the Board the persons to be nominated for election as Directors and to each of the Board’s committees, and develop and recommend to the Board a set of corporate governance guidelines; and in respect of its corporate governance functions, to ensure that the Company is operated and managed for the benefit of all shareholders and to ensure the Company’s compliance with the Listing Rules and safeguards relating to the weighted voting rights structures of the Company.

 

13 

 

 

The Nominating and Corporate Governance Committee comprises three independent non-executive Directors, namely Mr. Zhao Hongqiang, Mr. Jiang Zhenyu and Prof. Xiao Xing, Mr. Jiang as the chairman of the Nominating and Corporate Governance Committee.

  

OTHER INFORMATION

 

Purchase, Sale or Redemption of the Company’s Listed Securities

 

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s securities listed on the Stock Exchange since the Listing Date up to December 31, 2021.

 

Material Litigation

 

The Company was not involved in any material litigation or arbitration during the year ended December 31, 2021. The Directors are also not aware of any material litigation or claims that are pending or threatened against the Group since the Listing Date and up to the date of this announcement.

 

Dividend Declaration of Annual Dividend and Closure of Register of Members

 

The Board does not recommend the distribution of an annual dividend for the year ended December 31, 2021.

 

14 

 

 

  

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE Loss

(All amounts in thousands, except for share and per share data)

 

       For the year ended
December 31,
 
   Note   2020   2021 
       RMB   RMB 
Revenues:            
 Vehicle sales        9,282,703    26,128,469 
 Other sales and services        173,906    881,310 
                
Total revenues   9    9,456,609    27,009,779 
                
Cost of sales:               
 Vehicle sales        (7,763,628)   (20,755,578)
 Other sales and services        (143,642)   (492,747)
                
Total cost of sales        (7,907,270)   (21,248,325)
                
Gross profit        1,549,339    5,761,454 
Operating expenses:               
 Research and development   10    (1,099,857)   (3,286,389)
 Selling, general and administrative   11    (1,118,819)   (3,492,385)
                
Total operating expenses        (2,218,676)   (6,778,774)
                
Loss from operations        (669,337)   (1,017,320)
Other (expense)/income:               
 Interest expense        (66,916)   (63,244)
 Interest income and investment income, net        254,916    740,432 
 Changes in fair value of warrants and derivative liabilities        272,327     
 Others, net        20,133    187,320 
                
Loss before income tax expense        (188,877)   (152,812)
 Income tax benefit/(expense)   13    22,847    (168,643)
                
Net loss from continuing operations        (166,030)   (321,455)
Net income from discontinued operations, net of tax        14,373     
                
Net loss        (151,657)   (321,455)
                
 Accretion on convertible redeemable preferred shares to redemption value        (651,190)    
 Effect of exchange rate changes on convertible redeemable preferred shares        10,862     

 

15 

 

  

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE Loss (Continued) 

(All amounts in thousands, except for share and per share data)

 

       For the year ended
December 31,
 
   Note   2020   2021 
       RMB   RMB 
             
Net loss attributable to ordinary shareholders of Li Auto Inc.        (791,985)   (321,455)
                
 Including: Net loss from continuing operations attributable to ordinary shareholders        (806,358)   (321,455)
Net income from discontinued operations attributable to ordinary shareholders        14,373     
                
Weighted average number of ordinary shares used  in computing net loss per share               
Basic and diluted   12    870,003,278    1,853,320,448 
                
Net (loss)/earnings per share attributable to ordinary shareholders               
 Basic and diluted               
 Continuing operations   12    (0.93)   (0.17)
 Discontinued operations   12    0.02     
                
Net loss per share   12    (0.91)   (0.17)
                
Net loss        (151,657)   (321,455)
Other comprehensive loss, net of tax               
 Foreign currency translation adjustment, net of tax        (1,020,728)   (516,687)
                
Total other comprehensive loss, net of tax        (1,020,728)   (516,687)
                
Total comprehensive loss, net of tax        (1,172,385)   (838,142)
 Accretion on convertible redeemable preferred
 shares to redemption value
        (651,190)    
 Effect of exchange rate changes on convertible
 redeemable preferred shares
        10,862     
                
Comprehensive loss attributable to ordinary shareholders of Li Auto Inc.        (1,812,713)   (838,142)

 

16 

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 

(All amounts in thousands, except for share and per share data)

 

       As of
December 31,
   As of
December 31,
 
   Note   2020   2021 
       RMB   RMB 
             
Assets               
Current assets:               
Cash and cash equivalents        8,938,341    27,854,224 
Restricted cash        1,234,178    2,638,840 
Time deposits and short-term investments        19,701,382    19,668,239 
Trade receivable   3    115,549    120,541 
Inventories   4    1,048,004    1,617,890 
Prepayments and other current assets   5    353,655    480,680 
                
Total current assets        31,391,109    52,380,414 
                
Non-current assets:               
Long-term investments        162,853    156,306 
Property, plant and equipment, net        2,478,687    4,498,269 
Operating lease right-of-use assets, net        1,277,006    2,061,492 
Intangible assets, net        683,281    751,460 
Deferred tax assets        59,156    19,896 
Other non-current assets        321,184    1,981,076 
                
Total non-current assets        4,982,167    9,468,499 
                
Total assets        36,373,276    61,848,913 
                
Liabilities            
Current liabilities:               
Short-term borrowings            37,042 
Trade and notes payable   7    3,160,515    9,376,050 
Amounts due to related parties        19,206    37,455 
Deferred revenue, current        271,510    305,092 
Operating lease liabilities, current        210,531    473,245 
Accruals and other current liabilities   6    647,459    1,879,368 
                
Total current liabilities        4,309,221    12,108,252 

 

17 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) 

(All amounts in thousands, except for share and per share data)

 

       As of
December 31,
  

As of
December 31,

 
   Note   2020   2021 
       RMB   RMB 
Non-current liabilities:               
Long-term borrowings   8    511,638    5,960,899 
Deferred revenue, non-current        135,658    389,653 
Operating and finance lease liabilities, non-current        1,392,136    1,369,825 
Deferred tax liabilities        36,309    153,723 
Other non-current liabilities        184,717    802,259 
                
Total non-current liabilities        2,260,458    8,676,359 
                
Total liabilities        6,569,679    20,784,611 
                
Total shareholders’ equity        29,803,597    41,064,302 
                
Total liabilities and shareholders’ equity        36,373,276    61,848,913 

 

18 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(All amounts in thousands, except for share and per share data)

 

  

For the year ended
December 31,

 
   2020   2021 
   RMB   RMB 
Net cash provided by operating activities   3,139,804    8,340,385 
Net cash used in investing activities   (18,737,725)   (4,257,244)
Net cash provided by financing activities   24,710,697    16,709,533 
Effects of exchange rate changes on cash and cash equivalents and restricted cash   (376,646)   (472,129)
           
Net increase in cash, cash equivalents and restricted cash   8,736,130    20,320,545 
Cash, cash equivalents and restricted cash at beginning of the year   1,436,389    10,172,519 
           
Cash, cash equivalents and restricted cash at end of the year   10,172,519    30,493,064 

 

19 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION 

(All amounts in thousands, except for share and per share data)

 

1GENERAL INFORMATION

 

Li Auto Inc. (“Li Auto”, or the “Company”) was incorporated under the laws of the Cayman Islands in April 2017 as an exempted company with limited liability. The Company, through its consolidated subsidiaries and consolidated variable interest entities (the “VIEs”) and VIEs’ subsidiaries (collectively, the “Group”), is primarily engaged in the design, development, manufacturing, and sales of new energy vehicles in the People’s Republic of China (the “PRC”).

 

In preparation for the initial public offering and listing of the Company’s shares on the Main Board of The Stock Exchange of Hong Kong Limited (the “HKEx”), the Group underwent a reorganization (the “Reorganization”) to establish the Company as the ultimate holding company of the companies now comprising the Group which conduct the Group’s Business. Details of the Group’s Reorganization have been disclosed in the section headed “HISTORY, REORGANIZATION AND CORPORATE STRUCTURE” of the Prospectus.

 

The Company’s shares have been listed on the HKEx since August 12, 2021.

 

This unaudited financial information and related notes for the year ended December 31, 2021 is presented in Renminbi and all values are rounded to the nearest thousand (RMB’000) unless otherwise indicated.

 

2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a)Basis of presentation

 

The accompanying unaudited financial information have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial information and the disclosure requirements of the Rules Governing the Listing of Securities on The HKEx, as amended, supplemented or otherwise modified from time to time (the “HK Listing Rules”).

 

(b)Use of estimates

 

The preparation of the unaudited financial information in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the unaudited financial information and accompanying notes.

 

Significant accounting estimates reflected in the Group’s unaudited financial information mainly include, but are not limited to, standalone selling price of each distinct performance obligation in revenue recognition and determination of the amortization period of these obligations, the valuation of share-based compensation arrangements, fair value of investments and derivative instruments, fair value of warrant liabilities and derivative liabilities, useful lives of property, plant and equipment, useful lives of intangible assets, assessment for impairment of long-lived assets and intangible assets, the provision for financial assets, lower of cost and net realizable value of inventories, product warranties, determination of vendor rebate, assessment of variable lease payment, and valuation allowance for deferred tax assets. Actual results could differ from those estimates.

 

20 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION (Continued) 

(All amounts in thousands, except for share and per share data)

 

(c)Segment reporting

 

ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.

 

Based on the criteria established by ASC 280, the Group’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews unaudited condensed consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole, and hence, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. As the Group’s long-lived assets are substantially located in the PRC, no geographical segments are presented.

 

3TRADE RECEIVABLE

 

An aging analysis of the trade receivable as of December 31, 2020 and 2021, based on the invoice date and net of provisions, is as follows:

 

   As of
December 31,
  

As of
December 31,

 
   2020   2021 
Within 3 months   10,429    16,462 
Between 3 months and 6 months   18,914    890 
Between 6 months and 1 year   77,903     
More than 1 year   8,303    103,189 
           
Total   115,549    120,541 

 

4INVENTORIES

 

Inventories consist of the following:

 

   As of
December 31,
  

As of
December 31,

 
   2020   2021 
Raw materials, work in process and supplies   227,836    1,468,801 
Finished products   820,168    149,089 
           
Total   1,048,004    1,617,890 

 

Raw materials, work in process and supplies as of December 31, 2020 and 2021 primarily consist of materials for volume production which will be transferred into production cost when incurred as well as spare parts used for after sales services.

 

Finished products included vehicles ready for transit at production plants, vehicles in transit to fulfill customers’ orders, new vehicles available for immediate sales at the Group’s sales and servicing center locations.

 

21 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION (Continued) 

(All amounts in thousands, except for share and per share data)

 

5PREPAYMENTS AND OTHER CURRENT ASSETS

 

Prepayments and other current assets consist of the following:

 

   As of
December 31,
   As of
December 31,
 
   2020   2021 
Prepayments to vendors   104,271    218,660 
Deductible VAT input   196,021    118,177 
Prepaid rental and deposits   30,357    48,929 
Loan receivable from Lifan Holdings(1)   8,000     
Others   15,006    97,106 
Less: Allowance for credit losses       (2,192)
           
Total   353,655    480,680 

 

(1)Loan receivable from Lifan Holdings was settled against the consideration payables for acquisition of Chongqing Zhizao in April 2021.

 

6ACCRUALS AND OTHER CURRENT LIABILITIES

 

Accruals and other current liabilities consist of the following:

 

   As of
December 31,
   As of
December 31,
 
   2020   2021 
Payables for purchase of property, plant and equipment   118,181    456,395 
Salaries and benefits payable   187,972    417,449 
Tax payable   50,088    277,233 
Accrued warranty(1)   55,138    154,276 
Payables for logistics expenses   43,571    143,632 
Payables for research and development expenses   35,032    94,517 
Deposits from vendors   9,120    27,716 
Advance from customers   9,285    10,262 
Payables for acquisition of Chongqing Zhizao   79,552    2,000 
Other payables   59,520    295,888 
           
Total   647,459    1,879,368 

 

22 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION (Continued) 

(All amounts in thousands, except for share and per share data)

 

(1)The Company provides product warranties on new vehicles based on the contracts with its customers at the time of sale of vehicles. The Company accrues a warranty reserve for the vehicles sold, which includes the best estimate of projected costs to repair or replace items under warranties. These estimates are primarily based on the estimates of the nature, frequency and average costs of future claims. The portion of the warranty reserve expected to be incurred within the next 12 months is included within the accrued and other current liabilities while the remaining balance is included within other non-current liabilities in the consolidated balance sheets.

 

   As of
December 31,
  

As of
December 31,

 
   2020   2021 
Accrued warranty          
 Current portion   55,138    154,276 
 Non-current portion   178,228    688,069 
           
Total   233,366    842,345 

 

7TRADE AND NOTES PAYABLE

 

Trade and notes payable consist of the following:

 

   As of
December 31,
  

As of
December 31,

 
   2020   2021 
Trade payable for raw materials   2,991,538    7,089,370 
Notes payable   168,977    2,286,680 
           
Total   3,160,515    9,376,050 

 

An aging analysis of the trade payable as at December 31, 2020 and 2021, based on the invoice date, is as follows:

 

   As of
December 31,
  

As of
December 31,

 
   2020   2021 
Within 3 months   3,118,840    7,539,833 
Between 3 months and 6 months   18,537    1,639,286 
Between 6 months and 1 year   10,676    161,913 
More than 1 year   12,462    35,018 
           
Total   3,160,515    9,376,050 

 

The trade payable is non-interest-bearing and are normally settled on 30-90 day terms.

 

23 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION (Continued) 

(All amounts in thousands, except for share and per share data)

 

8BORROWINGS

 

Borrowings consist of the following:

 

   Maturity date  Principal
amount
  Interest rate
per annum
   As of
December 31,
  

As of
December 31,

 
             2020   2021 
Convertible senior notes(1)  May 1, 2028  US$862,500   0.25%       5,397,941 
Secured borrowing  December 31, 2022  RMB94,550   6.1750%   98,717     
Unsecured corporate loan  June 30, 2022  RMB401,073   6.1750%   412,921     
Secured borrowing(2)  September 28, 2029  RMB600,000   4.8000%       600,000 
                      
Total              511,638    5,997,941 

 

Classified as:

 

   As of
December 31,
2020
  

As of
December 31,
2021

 
– Short-term borrowings       37,042 
– Long-term borrowings   511,638    5,960,899 
           
Total   511,638    5,997,941 

 

(1)In April 2021, the Company issued and sold convertible debt in an aggregate principal of US$862,500 through a private placement. The convertible debt will mature in 2028, bearing the interest at a rate of 0.25% per annum. The related interest is payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2021. The net proceeds from this offering were approximately US$844,876, equivalent to RMB5,457,984.

 

The convertible debt may be converted, at an initial conversion rate of 35.2818 ADS per US$1,000 principal amount (which represents an initial conversion price of approximately US$28.34 per ADS) at each holder’s option at any time on or after November 1, 2027, until the close of business on the second scheduled trading day immediately preceding the maturity date of May 1, 2028. Upon conversion, the Company will pay or deliver to such converting holders, as the case may be, either cash, ADSs, or a combination of cash and ADSs, at its election.

 

Holders of the convertible debt have the rights to require the Company to repurchase all or partial for their convertible debt on May 1, 2024 and May 1, 2026 or in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount of the convertible debt to be repurchased, plus accrued and unpaid interest.

 

The Company accounted for the convertible debt as single instruments measured at its amortized cost as long-term borrowings on the unaudited condensed consolidated balance sheets. The issuance costs were recorded as an adjustment to the long-term borrowings and are amortized as interest expense using the effective interest method over the contractual life to the maturity date (i.e., May 1, 2028). For the year ended December 31, 2021, the convertible debt related interest expense was RMB21,369 (US$3,353). As of December 31, 2021, the principal amount of the convertible debt was RMB5,499,041 and the unamortized debt issuance cost was RMB101,100, respectively.

 

24 

 

 

 

NOTES TO THE UNAUDITED FINANCIAL INFORMATION (Continued) 

(All amounts in thousands, except for share and per share data)

 

(2)As of December 31, 2020 and 2021, the secured borrowing was classified as follows:

 

   As of
December 31,
   As of
December 31,
 
   2020   2021 
         
Secured borrowing          
 Current portion