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Li Auto Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- SG&A expenses in Q4 were RMB 3.1 billion or $421.5 million, down 5.9% YoY and 8.4% QoQ.
- The company solidified its position as a top tier player in the autonomous driving sector.
- The company's robust cash generation capabilities and substantial cash reserves provide solid support to its long-term investments in electrification and artificial intelligence.
- The company believes that in the future it will see an increasing number of Li Auto vehicles on the road in different countries.
- The company's business continues to expand and several financial metrics have reached record highs for Q4.
- Cost of sales in Q4 was RMB 35.3 billion or $4.8 billion, up 10.5% YoY and 4.9% QoQ.
- Net income in Q4 was RMB 3.5 billion or $484 million, down 38.6% YoY and up 25.3% QoQ.
- The company expects the first quarter total revenue to be between RMB 23.4 billion and RMB 24.7 billion or $3.2 billion and $3.4 billion, representing a YoY decrease of 8.7% to 3.5%.
- The sequential decrease was mainly due to the loss on purchase commitment and lower average selling price due to interest subsidies provided to customers.
- The year-over-year decrease was mainly due to different product mix.
- Total revenue for Q1 is expected to be between RMB 23.4 billion and RMB 24.7 billion or $3.2 billion and $3.4 billion, representing a YoY decrease of 8.7% to 3.5%.
- Vehicle gross margin for Q1 is expected to be around 19%.
- The company will upgrade existing models and ensure the smooth launch of new BEV models.
- The company will continue to embrace intelligent transformation by strengthening R&D, technological innovation, and cash generation capabilities to ensure sustainable long-term development and breakthroughs in the artificial intelligence era.
Q&A Highlights from Li Auto Inc Earnings Call Q4 2024
- Analyst asked about the launch timing and highlights of Li Auto's BEV models.
- Li Auto plans to launch two pure electric SUVs this year, the Li i8 in July and the Li i6 in the second half of the year. The company aims to catch the sales momentum in Q3 and Q4 and save enough orders to support deliveries for Q1 and Q2. They also mentioned that they do not release too much information before official product release.
- Li Auto plans to launch two pure electric SUVs this year, the Li i8 in July and the Li i6 in the second half of the year. The company aims to catch the sales momentum in Q3 and Q4 and save enough orders to support deliveries for Q1 and Q2. They also mentioned that they do not release too much information before official product release.
- Analyst asked about Li Auto's overall strategy for sales growth in 2023 and when monthly sales could return to the previous peak level or achieve a record level.
- Li Auto's overall strategy for sales growth in 2023 includes product upgrades, expansion of sales network, and reinforced marketing practices, as well as expansion overseas. They plan to launch the 80 upgraded version of their L series and MEGA series, as well as a new BEV electric SUV model in 2023. They have also improved their autonomous driving system V13, which has been trained on 10 million video clips and has significantly improved its capability. Li Auto is expanding their sales network by increasing coverage in Tier 4 and Tier 5 cities, and they have opened over 200 retail stores and pop-up stores to increase customer acquisition channels. They have also introduced professional livestreaming sales representatives and dedicated DCC call center personnel to increase conversion rates. Li Auto is also expanding overseas, with significant progress in Middle Asia, Asia Pacific, and various other markets. They plan to increase investments in Latin America, the Middle East, and European markets, and have made progress in working with authorized dealers overseas. The company is confident about overall sales growth in 2023.
- Li Auto's overall strategy for sales growth in 2023 includes product upgrades, expansion of sales network, and reinforced marketing practices, as well as expansion overseas. They plan to launch the 80 upgraded version of their L series and MEGA series, as well as a new BEV electric SUV model in 2023. They have also improved their autonomous driving system V13, which has been trained on 10 million video clips and has significantly improved its capability. Li Auto is expanding their sales network by increasing coverage in Tier 4 and Tier 5 cities, and they have opened over 200 retail stores and pop-up stores to increase customer acquisition channels. They have also introduced professional livestreaming sales representatives and dedicated DCC call center personnel to increase conversion rates. Li Auto is also expanding overseas, with significant progress in Middle Asia, Asia Pacific, and various other markets. They plan to increase investments in Latin America, the Middle East, and European markets, and have made progress in working with authorized dealers overseas. The company is confident about overall sales growth in 2023.
- Analyst asked about Li Auto's plans for AI-related investments and the scale of those investments in the coming years.
- Li Auto's management believes that the company's positioning in the AI age is to become a hardware or device manufacturer, and they plan to invest heavily in the development of AGI devices, including robots that can navigate themselves and enhance human capabilities. They also plan to provide services to users in different scenarios, similar to Apple's approach of providing devices that cover different aspects of users' lives.
- Li Auto's management believes that the company's positioning in the AI age is to become a hardware or device manufacturer, and they plan to invest heavily in the development of AGI devices, including robots that can navigate themselves and enhance human capabilities. They also plan to provide services to users in different scenarios, similar to Apple's approach of providing devices that cover different aspects of users' lives.
- Analyst asked about the competition in the autonomous driving market and whether it will continue to focus on autopilot in 2026.
- Li Auto's management believes that the competition in the autonomous driving market will transition from competing for growth to competing for market share in 2026, with brand becoming an important factor in users' purchase decisions. They also expect that many car brands will continue to improve and accelerate their development of advanced autonomous driving technologies, leading to increased competition in the technology front. Li Auto's strategy is to complete their product portfolio with several cars launching in 2026, expand their supercharging network and service experience, and work with partners to accelerate their growth in overseas sales and service networks.
- Li Auto's management believes that the competition in the autonomous driving market will transition from competing for growth to competing for market share in 2026, with brand becoming an important factor in users' purchase decisions. They also expect that many car brands will continue to improve and accelerate their development of advanced autonomous driving technologies, leading to increased competition in the technology front. Li Auto's strategy is to complete their product portfolio with several cars launching in 2026, expand their supercharging network and service experience, and work with partners to accelerate their growth in overseas sales and service networks.
- Analyst asked about the company's first quarter gross margin guidance.
- Li Tie, the CEO of the company, stated that the company expects its Q1 vehicle gross margin to be around 19% due to the low season and sales promotions after Chinese New Year.
- Li Tie, the CEO of the company, stated that the company expects its Q1 vehicle gross margin to be around 19% due to the low season and sales promotions after Chinese New Year.
- Analyst asked about the change in management allocation and the vehicle business and the upcoming AI business.
- The company's CEO, Li Tie, clarified that the company's CEO, Li Tie, remains the CEO of the company and oversees the different departments related to the car business, including vehicle lines, product department, branding, and strategy department. The company has allocated new responsibility under the VLM and PVSD framework and assigned new persons in charge, and they remain devoted to relying on efficient collaboration across the company to support their success in the long term.
- The company's CEO, Li Tie, clarified that the company's CEO, Li Tie, remains the CEO of the company and oversees the different departments related to the car business, including vehicle lines, product department, branding, and strategy department. The company has allocated new responsibility under the VLM and PVSD framework and assigned new persons in charge, and they remain devoted to relying on efficient collaboration across the company to support their success in the long term.
