Li Auto is currently embroiled in a class action lawsuit alleging that it misled investors by inflating market demand for its Li Mega MPV (multi-purpose vehicle) during the model’s launch.
The lawsuit, filed by a group of investors, accuses Li Auto and some of its executives of securities fraud, claiming that false statements were made that violated securities laws and led to financial losses for investors. Beijing-based attorney Hao Junbo’s law firm, representing the investors, issued a statement yesterday detailing the allegations.
According to the statement, investors are seeking damages for losses incurred due to the drop in Li Auto’s share price following the alleged securities violations. The law firm has offered to assist investors in participating in the lawsuit at no cost.
Li Auto has vehemently denied the allegations, stating that they are without merit. The company has pledged to vigorously defend itself and protect the rights of its shareholders. Local media outlet Sina Tech reported Li Auto’s response today.
Caixin, another local media outlet, also covered the class action lawsuit, noting that such lawsuits are common in the US stock market.
The controversy surrounds the launch of the Li Mega at the 2023 Guangzhou auto show on November 17, 2023. The Li Mega is Li Auto’s first battery electric vehicle (BEV), following its lineup of extended-range electric vehicles (EREVs).
Despite management’s optimism and expectations of the Li Mega becoming the top-selling model priced above RMB 500,000, initial reception fell short of projections. This led to a revision of delivery guidance for the first quarter and a subsequent drop in Li Auto’s US-traded shares.
The class lawsuit adds to Li Auto’s recent challenges, including reports of significant layoffs due to lower-than-expected sales. The company’s shares fell 7.48 percent on March 21 and have declined by 21 percent since March 20.