Company: LI
Filing Date: 2025-04-10
Form Type: 20-F
Source: 0001410578-25-000678
Chunk: 238

Company: Li Auto Inc.
Filing Date: 2025-04-10
Form: 20-F
Item: Item 11
Chunk 238
---
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits and wealth management products. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in market interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.

We may invest the net proceeds that we receive from our offerings in interest-earning instruments. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

Table of Contents

Foreign Exchange Risk

Our expenditures are mainly denominated in Renminbi and, therefore, we are exposed to risks relating to movements between Renminbi and U. S. dollars. Our exposure to U. S. dollars exchange rate fluctuation arises from the Renminbi-denominated cash and cash equivalents, restricted cash, time deposits and short-term investments, long-term time deposits, and long-term financial instruments held by us and our subsidiaries whose functional currency is U. S. dollars, and the U. S. dollar-denominated cash and cash equivalents, restricted cash, and time deposits and short-term investments held by our subsidiaries whose functional currency is Renminbi. We enter into hedging transactions in an effort to reduce our exposure to foreign currency exchange risk when we deem appropriate. The value of your investment in our Class A ordinary shares and the ADSs will be affected by the exchange rate between U. S. dollars and Renminbi because the value of our business is effectively denominated in Renminbi, while our Class A ordinary shares and the ADSs will be traded in Hong Kong dollars and U. S. dollars, respectively.

The conversion of Renminbi into foreign currencies, including U. S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against U. S. dollars, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U. S. government policy may impact the exchange rate between Renminbi and the U. S. dollar in the future.

To the extent that we need to convert U. S. dollars or other currencies into