Recently, Chinese electric vehicle manufacturer Li Auto was sued by investors in the United States for alleged securities fraud.
According to Beijing lawyer Hao Junbo, some investors have filed a lawsuit against Li Auto and some senior executives for securities fraud in the U.S. Hao announced the information publicly to gather investors to participate in a free class-action lawsuit.
The lawsuit period ran from February 26 to March 20, 2024. On February 26, Li Auto released its 2023 full-year performance and gave guidance for the first quarter of 2024 delivery volume. On March 21, Li Auto lowered its first-quarter delivery volume target.
Hao Junbo claimed that Li Auto exaggerated market demand and company operational strategies when launching the MEGA model, making it unlikely to achieve the first-quarter vehicle delivery target in 2024. Investors believe that Li Auto and some executives made false statements during the lawsuit period, with misleading public statements violating securities laws, causing losses to investors. Investors have applied to the court to order Li Auto to compensate for losses caused by its illegal actions leading to a drop in stock prices.
Hao Junbo mentioned that similar class-action lawsuits in the U.S. stock market are quite common. When the actions of a listed company themselves lead to a drop in stock or option prices, investors who suffer significant losses can contact lawyers to file claims.
Public data shows that the number of class-action lawsuits against Chinese listed companies in the U.S. has exceeded 50, including companies like Baidu, Alibaba, Tencent, Pinduoduo, Didi, among others in the internet sector. In the new forces of car manufacturing, in March 2019, NIO (NYSE: NIO), which had been listed for only six months, was accused of false statements regarding its factory planning and was sued by investors.
Li Auto had high hopes for its first all-electric MPV model, MEGA, setting ambitious sales targets, with a monthly sales target of 8,000 units. However, after its launch on March 1, the model did not perform as expected. Li Auto adjusted its first-quarter and full-year sales targets on March 21, shifting from a nationwide rollout to focusing sales in a few core cities. On April 22, Li Auto announced a price reduction of 30,000 RMB for MEGA, less than two months after its launch.
MEGA is a large pure electric MPV with a price of 559,800 RMB.
Regarding the reasons for the initial failure of MEGA, Caixin believes that Li Auto set overly ambitious goals. In the Chinese market, among all cars priced above 500,000 RMB, only the BMW SUV X5 achieves the level of 8,000 units sold per month. Additionally, the exterior design of MEGA was also targeted by some mainland electric vehicle manufacturers, contributing to lower-than-expected sales.
On May 15, Li Auto closed at 25.92 USD/ADS, down 1.82% in local time in the United States.
As of 4 p.m. Beijing time on May 16, Li Auto closed at 99.700 HKD per share on the Hong Kong Stock Exchange, down by -2.73%, with a total market value of 198.6 billion HKD.
Li Auto is a Chinese new energy vehicle manufacturer that designs, researches, develops, manufactures, and sells luxury smart electric vehicles. Established in July 2015 with its headquarters in Beijing, it officially listed on the NASDAQ stock market in the U.S. on July 30, 2020, with the stock code “LI”.