Chinese electric vehicle startup Li Auto is about to close a $550 million round of funding led by Meituan Dianping, as the local services giant looks to gain a firmer foothold in the country’s emerging electrified vehicle market.

Why it matters: A second investment in Li Auto, also known as Lixiang, underscores Meituan’s confidence in the plug-in hybrid vehicle (PHEV) maker.

Details: Meituan is working on a deal to invest about $500 million in Li Auto, the majority of the $550 million that the automaker seeks to raise for its Series D, according to a Chinese business news outlet LatePost report last week citing people with knowledge of the matter.

  • The deal would value the company at $4.05 billion, according to the report.
  • Li Auto founder and CEO Li Xiang will invest $30 million, while other earlier investors did not follow up.
  • Meituan and Li Auto declined to comment. However, Wang Xing, founder and CEO of Meituan “liked” a post about the deal with his verified account on Chinese micro-blogging platform Weibo.
  • The potential investment comes just a year after Wang Xing first invested $300 million for a 10% stake as part of the EV startup’s $530 million Series C.
  • The Chinese billionaire earlier this year said that that Li Auto, Nio, and Xpeng would be the only three young EV makers that stood out from the crowd.
  • The five-year-old automaker has raised over $2 billion from investors including Tiktok owner Bytedance, and venture capital firms Matrix Partners China and BlueRun Ventures.

Context: Beijing-based Li Auto is playing catch-up to Nio and Xpeng having only delivered its first mass market model six months ago.

  • The seven-seater PHEV Lixiang One, or Li One, topped best-selling rankings for medium-to-large clean energy SUVs, with 7,775 units sold in the first five months of this year, according to figures from China Automotive Technology and Research Center. Its sales were almost triple what the second-place Lexus RX450h sold during the same time period.
  • The company earlier this month said it has delivered more than 10,000 vehicles, and plans to expand its sales network to more than 30 Chinese domestic cities in the third quarter of this year. To compare, Nio has opened more than 100 showrooms in 70 domestic cities as of May and plans to double the number by year-end.
  • A Lixiang One caught fire in downtown Changsha city located in central Hunan province last month. The company explained that the fire was a random accident caused by a piece of a car paint mattress caught on the exhaust pipe rather than problems with the vehicle’s powertrain or battery.

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Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen