(Yicai Global) May 28 -- Chinese electric vehicle startup Li Auto refused to comment on a media report that it will take over Beijing Hyundai Motor’s No. 1 plant, at which production has been suspended for two years, the Securities Times reported today.

Li Auto will locate its flagship factory in Beijing’s Shunyi district, with a total investment of CNY6 billion (USD941.4 million), 36kr reported yesterday, citing unidentified sources familiar with the matter. The carmaker will build a digital smart plant based on Hyundai’s No. 1 factory that is scheduled to go into operation in 2023, with a plan for output to reach CNY30 billion in 2024, the report said.

Beijing Li Auto was established early last month in Shunyi district, 14 kilometers away from Beijing Hyundai’s No. 1 factory, the report said.

The stock price of Li Auto [NASDAQ:LI] closed up 3.6 percent at USD23.7 yesterday, giving it a total market value of about USD21.4 billion.

Founded in 2002, Beijing Hyundai is a joint venture. Its production and sales in China exceeded 1 million units in 2013 and sales peaked at 1.1 million in 2016, second only to Volkswagen. Then sales began to decline.

Korean cars had just a 2.6 percent share of the Chinese market in the first four months of this year, down 38 percent from a year ago, according to data from the China Association of Automobile Manufacturers.

Beijing Hyundai has five factories, with a planned total annual output of 1.65 million vehicles, but the company sold only 502,000 cars last year. Given the sharp decline in sales and serious overcapacity, Hyundai said in 2019 that it would suspend production at its oldest No. 1 plant in Beijing, which has annual production capacity of 300,000 units.

Founded in 2015, Li Auto delivered 12,579 electric sport utility vehicles in the first quarter of this year, a more than fourfold increase on a year ago. Revenue from car sales also surged more than four times to CNY3.5 billion in the first quarter.

Li Xiang, its chief executive, aims to take a 20 percent share of the electric car market by 2025. As sales of smart EVs in China are expected to reach 8 million in 2025, Li Auto would need to sell 1.6 million to meet the goal. The firm has only one factory in Changzhou, with an annual output of 100,000 units.

Editor: Tom Litting