Shares of Chinese electric vehicle manufacturer Li Auto Inc. (NASDAQ: LI) closed about 2.4% higher in the regular session on Tuesday, but fell 4.4% in the extended session.
What Happened: Li Auto said it plans to offer up to $750 million in convertible senior notes due in 2028, subject to market conditions. The company will determine the initial conversion rate, interest rate, and other terms of the notes at the time of pricing of the offering.
Li Auto also intends to grant the initial buyers of the notes a 13-day option to buy up to an additional $112.5 million in notes. The notes will mature on May 1, 2028.
The company will use the net proceeds from the debt offering for research and development of new vehicle models, including battery electric vehicle models, other R&D, and for working capital as well as other general corporate purposes.
See Also: 3 Hot Chinese EV Stocks With Growing Sales
Why It Matters: Electric vehicle manufacturers operate in an investment-intensive industry that necessitates huge cash reserves to expand their product and service offerings as well as pursue innovation to stay relevant in the industry.
Homebred Chinese companies such as Li Auto, Xpeng Inc. (NYSE: XPEV) and Nio Limited (NYSE: NIO) as well as U.S.-based Tesla Inc. (NASDAQ: TSLA) are vying for a piece of the lucrative Chinese EV market, which is the world’s largest.
Chinese companies, including Li Auto, Nio and Xpeng are now working on developing new electric vehicle technologies, including ultra-fast charging, next generation computing platforms and autonomous driving technologies.
Li Auto’s Li One SUV uses extended-range technology, which allows the vehicle to run on a battery pack that can be charged by a gasoline engine, significantly increasing its range.
Price Action: Li Auto shares closed about 2.4% higher on Tuesday at $25.53, but declined 4.4% in the after-hours session to $24.40.
Read Next: Why Li Auto Is A ‘Quality Asset’ In Growing EV Space
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