- Li Auto will contribute 1 billion yuan and external investors 625 million yuan under the signed agreements.
- Li Auto will retain control and continue consolidating the unit’s financial results, while 2 equity incentive plans will help attract and retain talent.
Li Auto (NASDAQ: LI) has signed agreements for the first equity funding round of its Mach chip business, bringing in outside capital to support research and development, commercialization and expansion beyond the automotive market.
The company announced the financing on Friday, with an agreed investment of 1.625 billion yuan ($242 million) and a post-money valuation of 17.1 billion yuan ($2.5 billion) if the additional subscription right is fully exercised.
The financing is for Shanghai Mahe Xin Technology Co Ltd (MHX Technology). Li Auto will invest 1 billion yuan through a wholly owned subsidiary, while external investors will contribute a combined 625 million yuan.
The round is led by Hangzhou Jingtao, Lanchi Ventures and Huaye Tiancheng, with participation from MiraclePlus.
Hangzhou Jingtao and its affiliated funds have also been granted an additional subscription right of up to 500 million yuan. Full exercise of that right would bring the total investment to 2.125 billion yuan.
The additional subscription right can be exercised on a one-time basis on or before December 31, 2026, at the same price per unit of increased registered capital as the initial financing, according to the announcement.
The 17.1 billion yuan post-money valuation is conditional on full exercise of the additional subscription right. Completion of the financing remains subject to customary closing conditions.
LatePost reported on September 21 that Li Auto’s chip business was pursuing its first external funding round at a pre-money valuation of about 15 billion yuan. The latest announcement formally confirms the financing arrangements and discloses the valuation following the additional investment.
Li Auto said it will retain control of MHX Technology and continue consolidating its financial results after the financing. MHX Technology will also establish 2 equity incentive plans for employees and key contributors.
Assuming full utilization of both incentive plans and full exercise of the additional subscription right, Li Auto, external investors and entities administering the incentive plans are expected to hold stakes of 74.01%, 6.58% and 19.41%, respectively.
The financing will support chip research and development and commercialization, while the equity incentives aim to attract, motivate and retain key talent, aligning participants’ interests with the business’s long-term growth.
Alongside serving Li Auto’s vehicles, MHX Technology will pursue product supply and partnerships with external customers, drawing on its technology and product portfolio spanning chips, domain controllers and operating systems.
Expanding into non-automotive applications and serving a broader customer base will help achieve greater economies of scale and support continued research and product development, Li Auto said.
The company aims to develop its chip and domain controller operations into a second growth engine alongside its EV business, while preserving synergies across chip, AI model and vehicle development.
Li Auto had previously signaled plans to supply its technologies to external customers. President Ma Donghui said in September that chips and silicon carbide modules are relatively compact and adaptable, allowing them to be developed into standardized products for external sales.
The Mach M100, Li Auto’s first mass-produced in-house driver-assistance chip, was formally unveiled in May. It uses a 5-nanometer automotive-grade process, delivers 1,280 TOPS of computing power per chip and is already installed in the company’s new-generation production vehicles.
Li Auto describes the M100 as the world’s first dynamic dataflow AI chip. The company said it is building full-stack capabilities for on-device AI through the co-design of algorithms, compilers, operating systems and chips.
A paper on the chip’s architecture was accepted by the industry track of the International Symposium on Computer Architecture (ISCA 2026), making Li Auto the first company in the automotive industry to have a paper accepted by that track, it said.
The company is also exploring a cloud inference chip based on a dataflow architecture, according to earlier reporting by LatePost. That approach could extend its chip business from vehicles to data centers.
Li Auto’s financing arrangement follows a similar path to that of Nio Inc (NYSE: NIO). Nio’s chip subsidiary GeniTech Co Ltd (Shenji) completed its first funding round of 2.257 billion yuan in February, with Nio retaining a 62.7% stake afterward.
Xpeng (NYSE: XPEV) also has an in-house driver-assistance chip and is already supplying it for Volkswagen vehicles in China. Xpeng has yet to announce separate financing for its chip business.
Morgan Stanley says GeniTech’s debut at WAIC 2026 takes Nio’s stock narrative one step further toward a vertically integrated AI chip platform.
($1 = 6.7220 yuan)
Update: More details have been added based on Li Auto’s statement.
