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Li Auto Sees 30% Rise in Yearly Vehicle Deliveries Despite Decline

Li Auto's vehicle deliveries rose by nearly 30% year-over-year. However, a month-over-month decline could impact stock performance in the competitive EV market.

Date: 
AI Rating:   5
Earnings Performance Overview
Li Auto reported a delivery of 26,263 vehicles for February, signifying a year-over-year growth of almost 30%. This growth stands in contrast to a month-over-month decline of 12%, which might raise concerns for investors regarding seasonal performance and competitive positioning.

Market Competition
In February, Li Auto's sales performance was surpassed by rival brands, particularly Xpeng, which claimed 30,453 deliveries, a staggering increase of over six times from last year. This competitive pressure illustrates the rapidly evolving landscape in the electric vehicle (EV) market, which now has over 100 brands vying for market share.

Product Performance Challenges
Li Auto’s growth may have been influenced by the introduction of its affordable Li L6 model. However, the company faces challenges, including a slowdown due to extensive promotional sales at the end of last year and underwhelming demand for its high-end MEGA van, priced over $70,000, which has not met investor expectations. The lack of advancements in autonomous driving technology compared to rivals has also hindered Li Auto's competitiveness.

Revenue Growth and Valuation
Positive outlook centers on Li Auto’s revenue growth projection of around 30% for 2025, signaling potential for future performance. Trading at approximately $27 per share, the stock at roughly 17x consensus earnings may appear attractive compared to Tesla’s 100x earnings despite its lower projected revenue growth of 15% for the same year.

Future Growth Potential
As Li Auto plans to release additional purely electric models, such as the Li i8 SUV, expected in July, investor anticipation could increase. The potential positive impacts from increased foreign capital inflow into China, bolstered by government stimulus programs and advancements in technology, could significantly enhance Li Auto’s investors' perceptions, potentially allowing the stock to rise significantly, reflected in forecasts that suggest upsides to around $54 per share by reassessing valuation metrics.
Stocks:  LI XPEV NIO