Li Auto Reports Growth Amid Competitive Challenges

Li Auto's vehicle deliveries rose 16.2% YoY to 58,513 in December. However, this growth lags behind rivals Nio and Xpeng. The competitive landscape and pricing pressures may affect future stock performance.

Date: 06-01-2025

AI Rating: 5

Earnings Performance: The report highlights Li Auto's vehicle deliveries for December 2024, increasing by 16.2% year-over-year, reaching a total of over 500,000 vehicles for the year. This achievement marks a significant milestone for the company but is overshadowed by its competitors, Nio and Xpeng, which reported much higher growth rates of 73% and 82%, respectively. Such comparative underperformance can be a concern for investors.

Revenue Growth Potential: Li Auto is projected to see revenue expand by approximately 18% in 2024 and about 33% in 2025. Although this seems promising, it’s essential to note that Li Auto's stock is trading at 1.2 times its estimated revenues for 2024, which may indicate it is priced reasonably, but continuous growth will be critical.

Sales Mix and Pricing Pressure: A notable concern is the declining average selling prices due to a shift in the sales mix from premium models to the more affordable Li L6. This shift can negatively impact profit margins and overall revenue if not managed correctly. Additionally, the intense competition in the Chinese EV market, characterized by over 100 brands, exacerbates pricing pressures on Li Auto's sales.

Launch Delays: The report mentions a delay in launching Li Auto’s first purely electric model, the MEGA van, which did not meet expectations. This has pushed back future plans for additional electric vehicle launches to 2025. Delays in product launches can dampen investor sentiment and affect stock performance.

Overall, Li Auto’s recent performance shows growth potential, but the competitive challenges and pricing pressures are significant factors that could deter investors. Monitoring the company's ability to combat these challenges will be crucial going forward.

Stocks: LI NIO XPEV