China’s automotive giant reported disappointing quarterly profits, also delaying its SUV expansion to the future.
Li Auto, one of China’s giant electric vehicles (EVs) makers, reported disappointing quarterly revenues for the January-March period. The Beijing-based company also announced a delay in its SUV release, plunging its stock price even further.
Revenues came in at $3.55 billion, growing 36.4% year-on-year, missing analysts’ consensus of $3.84 billion. The jump in revenues was mostly attributed to the surge in vehicle deliveries: 80,400 units, a 52.9% year-on-year increase.
Despite the expansion in operations and revenues, Li Auto’s profits plunged when compared to last year. Income from operations came in at $13.9 million, an 88.7% fall. Vehicle margins declined by 19.3% to 50 bps, though gross margins expanded by 20.6% to 20 bps.
Fortunately for Li Auto, its liquidity appears in perfectly good shape. With $13.7 billion held as cash or equivalent in March 2024, Li Auto can definitely weather the disappointing results and consider future expansion.
Indeed, the company is now focused on aggressive vehicle deliveries, betting on its latest cheap models. “In March, we launched and commenced delivery of our high-tech flagship family MPV, Li MEGA, which is also our first high-power charging BEV,” chairman and CEO Xiang Li said.
“Meanwhile, we accelerated our efforts to deploy supercharging stations nationwide, adding charging resources for Li Auto users to expedite the 0-to-1 development phase of our high-power charging BEVs,” he added.
Delayed SUV
Despite the recent expansion, Li Auto also announced a delay in its long-awaited SUV model. It will be Li Auto’s first fully-electric SUV and will be launched next year, the company said.
Li Auto cited a lack of charging stations in China as the reason for the delay. According to reports for the US market, the lack of charging stations is the main reason why consumers still prefer hybrid to electric cars.
Other EV manufacturing giants like Tesla and Nio installed over 2,000 charging stations in China. By contrast, Li Auto installed only about 400.
“Enough charging stations and enough incremental display spots (in our retail shops) are two critical and necessary conditions for selling our BEV SUV product,” chief executive Li said.
Li Auto’s stock price plunged almost 13% on Tuesday, with a further 3.32% fall expected in pre-market trade.
China Merchants Bank International analyst Shi Ji expects the company to focus less on profitability in 2024. According to Ji, Li Auto will now build a more solid foundation for future EV expansion.
