In a milestone achievement, Chinese electric vehicle (EV) manufacturer Li Auto has emerged as the first among China’s major EV startups to report an annual profit. The Beijing-based company disclosed an annual net income of 11.8 billion Chinese renminbi ($1.7 billion), marking a significant milestone for the rapidly evolving Chinese EV landscape.
Li Auto’s impressive financial results coincide with a surge in interest in EVs in China, the world’s largest electric car market. The company reported delivering 376,030 vehicles in the past year, nearly tripling its 2022 deliveries of 133,246. Furthermore, Li Auto expanded its vehicle margin to 21.5%, up from 19.1% in the previous year.
Investors responded positively to the news, with Li Auto’s shares surging by over 25% in Tuesday trading in Hong Kong. This surge added over $9 billion to the company’s market value, bringing its shares close to the peak recorded last August.
Li Auto’s success is attributed to its positioning in the market, targeting a premium consumer segment with pricing closer to that of Tesla, as opposed to the more affordable models offered by market leader BYD. BYD, backed by Warren Buffett’s Berkshire Hathaway, also reported record sales, overtaking Tesla as the world’s largest seller of battery electric vehicles.
Despite the positive results, Li Auto has provided a cautious outlook for the current quarter, projecting deliveries of around 100,000 to 103,000 EVs. This forecast reflects potential challenges in the fiercely competitive and rapidly evolving Chinese EV market, where economic uncertainties and intense competition have impacted consumer sentiment.
Li Auto’s president, Donghui Ma, emphasized the company’s commitment to maintaining a premium positioning, stating that there are no plans to launch a vehicle below 200,000 yuan ($27,800) in price. Ma expressed confidence in capturing a significant market share among households willing to invest above this threshold, projecting substantial future sales.
During an earnings call, Ma highlighted the potential for Li Auto’s growth in the autonomous driving sector, envisioning it as the “iPhone moment” for self-driving cars. He confidently stated that Li Auto would make autonomous driving a standard feature in its vehicles, anticipating widespread acceptance in just a few years. The company’s ambitious outlook positions it as a key player in the dynamic landscape of China’s rapidly evolving electric vehicle market.
