U.S.-listed Chinese electric vehicle startup Li Auto is raising $750 million through the sale of convertible senior notes to fund its research and development, as the company steps up efforts to compete with established players and newcomers like Baidu and Xiaomi.

Carrying an annual interest rate of 0.25%, the notes will mature in 2028, and can be converted into Li Auto’s American depositary shares at $28.34 apiece, representing a 27.5% premium on the closing price on Wednesday, the carmaker said in a statement on Thursday.

Beijing-based Li Auto said that it plans to use the proceeds for the research and development of new vehicle models and technologies and for general corporate purposes.

The announcement came just a week after smartphone maker Xiaomi joined the electric vehicle manufacturing fray with a massive plan to invest $10 billion in the business over the next decade.

Li Auto, which is reportedly mulling a secondary listing in Hong Kong, delivered 4,900 Li ONE plug-in hybrids in March, up 239% year-on-year. The company began delivering the Li ONE, its first car model, in December 2019, and plans to launch a second model next year.

In the fourth quarter of 2020, Li Auto became profitable, marking its first time in the black since it started deliveries of the Li ONE, which the company attributed to its investment in short-term wealth management products.

Contact reporter Ding Yi (yiding@caixin.com)

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