Li Auto's latest strategic move carries slim room for inaccuracies
Li Auto Adjusts Electric SUV Release Schedule and Expansion Plans
Li Auto, a Chinese automaker known for its extended-range electric SUVs, has announced some significant changes to its product release schedule and expansion plans.
In a recent Q1 earnings call, Li Auto's CEO, Li Xiang, revealed that the four planned pure electric SUV models, originally scheduled for the second half of 2024, are now set to be released in the first half of 2025. The Li i6 and Li i8 are the only models explicitly confirmed as electric SUVs by Li Auto. The exact names of all four models have not been fully disclosed.
The shift in the release schedule comes as Li Xiang announced no new pure electric SUV releases for the rest of 2024. This decision is part of Li Auto's strategy to compensate for the one-year gap through the sales efficiency of extended-range vehicles.
Li Xiang also shared his vision for supporting a new model to achieve monthly sales of over 10,000 units. He believes that about 500-600 new fixed exhibition spaces nationwide would be required for this.
In terms of store expansion, Li Auto's target has been adjusted from over 800 stores to around 550 stores by the end of the year. Of the 43 new stores opened this year, more than half can display over nine cars. Li Auto is currently adjusting the number and quality of sales stores to provide more exhibition cars and store space.
Financially, Li Auto's accounts payable increased by RMB 2.7 billion (USD 372.8 million) from the end of last year, and the company's inventory increased by about RMB 5.3 billion (USD 731.8 million) from the end of last year to RMB 12.1 billion (USD 1.6 billion). Despite this, Li Auto's Q1 financial performance showed a significant loss of RMB 585 million (USD 80.7 million), ending four consecutive quarters of operating profits.
However, the company's Q1 performance did yield some positive results. Li Auto achieved revenue of RMB 24.3 billion (USD 3.3 billion) with sales of 80,200 vehicles, a 32.3% increase from last year's Q1 revenue. In Q1, Li Auto delivered 80,400 vehicles, a 38% decrease from the previous quarter.
Looking ahead, Li Auto is aiming to build more than 2000 supercharging stations with over 10000 superchargers by the end of this year. The company is also looking to international markets for new growth opportunities, with plans to establish after-sales service systems in Central Asia and the Middle East this year, and explore selecting agents in countries and regions outside of Western Europe and North America for market expansion.
After price cuts, weekly orders for the L7, L8, and L9 models increased in April. Li Auto's factory for pure EVs has been in operation for a year, and waiting another year to start production is economically unviable.
The company is also making strides in the intelligent driving field, aiming to roll out the map-free smart driving feature for all AD Max vehicles nationwide in Q3 this year. This move is part of Li Auto's efforts to keep up with players like Huawei in the intelligent driving field.
These changes and adjustments reflect Li Auto's continued efforts to adapt to market demands and maintain its competitive edge in the rapidly evolving electric vehicle industry.
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