Li Auto has signed equity financing agreements worth 1.625 billion yuan ($242 million) for its chip and domain controller subsidiary, its first external capital raise for the business. The unit, Shanghai Mahe Xin Technology (MHX Technology), will keep its results consolidated within the automaker's financials after the deal closes.

Li Auto itself will inject 1 billion yuan through a wholly owned subsidiary, the company said on Friday. External investors — Hangzhou Jingtao, Lanchi Ventures, Huaye Tiancheng and MiraclePlus — will add a combined 625 million yuan. Completion remains subject to customary closing conditions.

The Hangzhou Jingtao Additional Investor holds a one-time right to invest up to 500 million yuan on or before December 31, 2026, at the same price per unit of increased registered capital. If fully exercised, total financing would reach 2.125 billion yuan.

What does the structure change for Li Auto?

Control stays in-house. Li Auto will retain control of MHX Technology and continue consolidating its financial results, which means the outside money does not dilute the operating picture investors track. The subsidiary will also set up two 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 would hold 74.01%, external investors 6.58%, and the incentive-plan administering entities 19.41%. For practitioners, the structure is a talent-retention tool as much as a funding tool: it aligns chip engineers' payouts with the unit's long-term growth rather than the parent's share price.

The company framed the rationale plainly. A dedicated platform for the chip and domain controller business will help it tap broader industrial opportunities, particularly in non-automotive sectors, and achieve greater economies of scale, Li Auto said. The proceeds are earmarked for research and development and commercialization.

What sits in the product pipeline?

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 (TOPS being the standard measure of AI chip throughput), and is already fitted in the company's vehicles.

President Ma Donghui said in September that chips and silicon carbide (a power-semiconductor material used in EV inverters) modules are relatively compact and adaptable, allowing them to be developed into standardized products for external sales. According to earlier reporting by local outlet LatePost, the company is also exploring a cloud inference chip based on a dataflow architecture — a design that processes data through fixed pathways rather than instruction-driven cycles — which could extend the business from vehicles into data centers.

The announcement formally confirms financing plans first reported by LatePost on September 21, when the outlet said the unit was targeting a first external round at a pre-money valuation of about 15 billion yuan. Friday's statement did not confirm that valuation figure.

How does it compare across the industry?

The move tracks a template set by Nio, whose chip subsidiary GeniTech (Shenji) completed a first funding round of 2.257 billion yuan in February, with Nio retaining a 62.7% stake. Chinese EV makers with in-house silicon are increasingly carving those operations into separately funded units — raising external capital and equity incentives without surrendering consolidation.

What to watch next: whether Hangzhou Jingtao exercises its 500-million-yuan right before the December 31, 2026 deadline, whether MHX Technology names its first external chip customer, and whether the reported cloud inference chip moves from exploration to a disclosed development program.