Li Auto, one of the Chinese start-ups vying to grab a bigger slice of the world’s largest electric vehicles market, has raised US$750 million by selling a convertible bond to fund new products and technology. The paper issued by the Beijing-based firm backed by mainland online services delivery giant Meituan carries an annual interest rate of 0.25 per cent, it said in a statement on Thursday. Before its maturity on May 1, 2028, investors can opt to convert it into Li Auto shares at US$28.34 per American depositary share, a 27.5 per cent premium to the closing price on Wednesday. The proceeds will fund research and development of new electric vehicle models and technologies, besides bolstering working capital. David Zhang, an analyst with North China University of Technology’s research centre for automobile industry innovation, said Chinese EV start-ups, including Li Auto, are under pressure to raise capital to better compete with technology giants like search engine giant Baidu and smartphones developer Xiaomi. “In the next two to three years, the start-ups will be under pressure to become profitable as competition escalates with many new players joining the fray,” he said. “The leading EV start-ups are supposed to convince investors that their products and technologies are competitive. Raising funds now is important since it will help ensure their smooth operations in the next few years.” Lei Jun says his company’s first electric car will be an SUV or a sedan The company, founded by 39 year-old serial entrepreneur Li Xiang, competes with Tesla and its Chinese rivals. Li Auto raised some US$1.1 billion by issuing ADS at US$11.5 each in its initial public offering in July last year. The number of pure electric cars, plug-in petrol-electric hybrids and fuel-cell electric vehicles in China will jump five-fold to 6.6 million units by 2025 from just over 1.3 million last year, according to a March forecast by UBS. Focusing on the sports utility vehicles in the price range of 200,000 to 500,000 yuan (US$31,000 to US$38,000), Li Auto saw its net loss narrow to 151.6 million yuan last year from a loss of 2.4 billion yuan (US$366 million) in 2019. Revenue jumped to 9.4 billion yuan (US$1.4 billion) from 284 million yuan (US$43 million) thanks to the sales ramp up of its maiden product. After starting mass production in November 2019, it delivered a total of some 33,500 Li ONEs as of the end of last year. The LI ONE is a six-seat, large premium electric SUV equipped with a range extension system that lengthens the distance driven before a recharge of the battery is required to 800 kilometres (500 miles). It should appeal to drivers in regions lacking easy access to charging stations, according to the company. Li Auto plans to launch a second model, a full-size premium extended-range electric SUV, next year. Li founded New York-listed online car dealer Autohome before starting Li Auto. The entrepreneur is estimated to have a net worth of US$4 billion according to the latest Forbes billionaire list published on Wednesday, putting him among 210 Chinese newcomers in the 2021 rich list.