Summary of Key Points
Avita Technology has submitted its second listing application just one month after the failure of its initial Hong Kong stock prospectus, due to an urgent cash crunch: It has burned through 13 billion yuan in cash over the past year and a half, and its current reserves will not last more than two years. Sales have plummeted (a 51.3% decrease compared to the same period in 2026, with only 12.7% of the annual target achieved in the first half of the year), falling far behind leading new players in the industry. The brand's price range has dropped from a high-end segment of 350,000 yuan to around 200,000 yuan, resulting in internal competition with Changan's own brands and the loss of its premium image. Profitability has not improved despite efforts; while its competitors are all turning profits, Avita is still losing money. This second attempt at listing seems more like a "last-ditch effort before running out of cash," but the capital market may not be convinced.
Detailed Analysis
1. Cash is Running Out, and Listing Is the Only Hope?
Avita's cash reserves are dwindling rapidly. At the end of 2024, it had 19.3 billion yuan; by the end of 2025, that number had dropped to 9.7 billion yuan, and by April 2026, it was down to 6.2 billion yuan—13.1 billion yuan were lost in just one and a half years! At this rate, its current cash will not last until next year. The company has accumulated losses of 13 billion yuan over four years, with losses increasing despite higher sales (revenue increased by 68.7% in 2025, but losses amounted to 11.2 billion yuan during the same period). Why is the cash burning so fast? Mainly because the early stages of car manufacturing require significant investment in research and development, factory construction, and channel expansion, and sales have not kept up, leaving revenues insufficient to cover costs. The urgency to list again is a attempt to raise funds to survive; otherwise, it may not make it through the year.
2. Sales Slump to a Standstill, with Little Chance of Meeting Targets
In the first half of 2026, Avita sold only 27,600 vehicles, a 51.3% decrease from the same period last year, averaging less than 5,000 vehicles per month. Leading new players in the industry (such as Xpeng and NIO) sell over 30,000 vehicles per month, with Xpeng even selling 93,000 vehicles in June—12 times more than Avita! The company's annual target of 220,000 vehicles was only met by 12.7% in the first half, meaning it would need to sell 33,000 vehicles per month in the second half to achieve its goal—a nearly impossible task. The consequences of poor sales are dire: reduced purchasing volumes leave it with little leverage in negotiating with suppliers, preventing cost reductions (in 2025, sales costs accounted for 90.6% of revenue, meaning 90 yuan were spent on each vehicle sold), creating a vicious cycle of low sales leading to high costs and further difficulty in selling.
3. The High-End Brand Drops Its Premium Status
Avita initially aimed for a high-end market, with the first car priced at 350,000 yuan. Prices were later reduced to 270,000 yuan, and then to 220,000 yuan, with the 2026 model falling below 210,000 yuan. This move, while seemingly more affordable, has trapped the brand in a difficult position. The 200,000 yuan price range overlaps with Changan's own high-end brands, Deep Blue and Qiyuan, leading to internal competition and dilution of its premium image. In 2025, Avita's gross profit margin was only 9.4%, one of the lowest in the industry, barely breaking even, far below competitors like Li Auto and NIO. Consumers buy high-end cars for prestige; now that prices are comparable to those of more mainstream brands, who will recognize Avita as a high-end option?
4. Profitability Lags Behind, While Competitors Are Profiting
The new energy industry has entered a phase of "profitability elimination." Li Auto has already turned a profit for the entire year, and NIO and Xpeng both reported quarterly profits in the fourth quarter of 2025. Only Avita is still losing money. The prospectus acknowledges that it is likely to continue incurring losses in 2026. Besides sales and cost issues, the brand's unclear positioning prevents it from setting higher prices, resulting in thin margins. Although Avita earned 182 million yuan from partnerships with Huawei in 2025, this was from investment income, not direct car sales. Investors are interested in the profitability of its core business (car sales), and reliance on investment income does not support a high valuation.
5. Second Listing Application: Desperate for Funds, but Will the Market Buy In?
The second prospectus was submitted just one month after the first failed, indicating a sense of urgency. One notable change is that the prospectus was shortened from 609 pages to 438 pages, yet the number of mentions of Huawei increased from 49 to 66, suggesting an attempt to leverage Huawei's reputation to attract investors. However, the capital market is realistic: with halved sales, declining prices, continuous losses, and shrinking cash reserves, what value does the Huawei partnership add? Avita once aimed to be the "first new energy stock listed by a central state-owned enterprise on the Hong Kong stock market," but now even that position is at risk. Investors buy stocks based on future profitability, and Avita's current fundamentals do not inspire confidence.
Conclusion
Avita holds significant assets from Changan, CATL, and Huawei, but it faces major challenges in terms of scale: failing to increase sales, unable to reduce costs, and lacking a stable brand image with no clear path to profitability. The second listing attempt is more of a last-ditch effort due to financial distress. If this listing fails, the risk of a broken capital chain is immediate. For consumers, buying Avita vehicles means accepting a brand without premium value and potential issues with after-sales service and vehicle resale value. For investors, entering now likely means taking on a company in a difficult situation. Avita's path forward looks bleak.