Li Auto Inc. Updates the Status Under Holding Foreign Companies Accountable Act

Rhea-AI Summary

Li Auto Inc. has been provisionally identified by the SEC as a Commission-Identified Issuer under the Holding Foreign Companies Accountable Act (HFCAA). This designation indicates concerns regarding the ability of U.S. authorities to inspect its auditor's working papers. Li Auto has filed its annual report on Form 20-F for the fiscal year ending December 31, 2021, on April 19, 2022. The company is actively seeking solutions to safeguard stakeholder interests while continuing to comply with relevant regulations in both the U.S. and China.

Positive

• Maintains dual-primary listing on the Hong Kong Stock Exchange, providing an alternative trading platform.
• Continues to comply with applicable laws and regulations in both China and the U.S.

Negative

• Identified by the SEC under the HFCAA, raising concerns over audit integrity.
• Potential trading prohibition of shares in the U.S. if identified for three consecutive years.

BEIJING, China, April 22, 2022 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China’s new energy vehicle market, today updates its status under the Holding Foreign Companies Accountable Act (the “HFCAA”). The Company was provisionally named by the United States Securities and Exchange Commission (the “SEC”) as a Commission-Identified Issuer on April 21, 2022 U.S. Eastern Time, following the Company’s filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021 with the SEC on April 19, 2022.

The Company understands that this identification under the HFCAA and its implementation rules issued thereunder indicates that the SEC determines that the Company used a registered public accounting firm whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board of the United States (the “PCAOB”) to issue the audit opinion for its financial statements for the fiscal year ended December 31, 2021.

In accordance with the HFCAA, the SEC shall prohibit a company’s shares or American depositary shares (“ADSs”) from being traded on a national stock exchange or in the over-the-counter trading market in the United States if the company has been identified by the SEC for three consecutive years due to PCAOB’s inability to inspect the auditor’s working paper.

The Company has been actively exploring possible solutions to protect the interest of its stakeholders. The Company maintains a dual-primary listing on The Main Board of The Stock Exchange of Hong Kong Limited under the stock code “2015.” Its Class A ordinary shares and ADSs remain mutually fungible. The Company will continue to comply with applicable laws and regulations in both China and the United States.

About Li Auto Inc.

Li Auto Inc. is a leader 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 refined 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

FAQ

What does the SEC's identification of Li Auto under the HFCAA mean?

The SEC's identification means that Li Auto's auditor's working papers cannot be fully inspected by U.S. authorities, raising concerns regarding compliance.

What actions is Li Auto taking following the SEC identification?

Li Auto is exploring solutions to protect its stakeholders' interests while continuing to comply with regulations in both China and the U.S.

What could happen if Li Auto is identified under the HFCAA for three consecutive years?

If identified for three consecutive years, Li Auto's shares may be prohibited from trading on U.S. national exchanges.

When did Li Auto file its annual report with the SEC?

Li Auto filed its annual report on Form 20-F for the fiscal year ended December 31, 2021, on April 19, 2022.

Does Li Auto have any alternative trading options?

Yes, Li Auto is listed on the Hong Kong Stock Exchange, which provides an alternative for investors.