Li Auto, It's Not Easy to Be an Outstanding Student
Out of the MEGA shadow, but Li Auto still has a tough time.
Since the release of the i8, a downward inflection point in Li Auto's stock price has emerged, reflecting the market's concerns about the profit prospects of its pure - electric models and short - term competitive pressures.
The release of the i6 did not inject a "shot in the arm" into Li Auto as expected, despite the fact that this low - key launched model achieved better - than - expected results. During the National Day holiday, Li Xinyang, the person - in - charge of Li Auto's third product line, said that all the production capacity of the i6 for this year had been sold out, which means that the number of orders on hand for the i6 may have significantly exceeded 50,000 units.
It is reported that Li Auto previously prepared a conservative production capacity of 45,000 - 50,000 units for the i6, and this figure was later adjusted to 68,000 units, including 7,000 units scheduled for production in September, and the planned production capacities from October to December are 13,000 units, 23,000 units, and 25,000 units respectively.
However, this is not enough to offset the impact of the decline of the L - series extended - range products. The "deviation" between the i6's better - than - expected results and the stock price means that Li Auto's pain during the transformation is far from over.
Since the end of last year, the stock price of XPeng, which has emerged from the quagmire, has been rising continuously, achieving a nearly four - fold increase in the Hong Kong stock market; even NIO, which is still in the red, saw its stock price start to soar in the past few months, with a nearly three - fold increase.
In contrast, Li Auto's stock price performance is completely inconsistent with its leading market performance. As an "excellent student" that achieved annual profits of over one billion yuan early on, Li Auto is now facing more stringent valuation criteria. It can no longer tell the story of "reversal from adversity" like XPeng and NIO. The market values more the quality of both the profit structure and growth realization.
Has the historical mission of extended - range vehicles ended?
The declining trend of the L - series extended - range models is the core reason for Li Auto's current dilemma.
Since June, Li Auto has seen a significant year - on - year decline in sales for four consecutive months, and the decline rate has been gradually expanding. Among them, the year - on - year declines in July and August were 39.7% and 40.7% respectively. Although this figure slightly rebounded to - 36.8% in September, this is not an inflection point of recovery, which is more due to the full - scale delivery of the i8 in that month.
This is not Li Auto's fault. Although the L - series models are still the leaders in the extended - range market, a clear inflection point has emerged in the entire extended - range market this year.
When Li Auto adhered to the extended - range route in the early days, it was widely questioned as "doing something in a roundabout way", but the performance of extended - range vehicles later slapped many people in the face. According to data released by the China Passenger Car Association, the year - on - year sales growth rates of extended - range electric vehicles in 2023 and 2024 were 181% and 78.7% respectively, making it the fastest - growing segment.
However, this year, although the extended - range market still shows an upward trend, the growth rate is far lower than that of the pure - electric market. In July and August, there were even year - on - year declines of 11.4% and 9.5% respectively. In August, Li Auto's overall sales were less than 30,000 units, and it was surpassed by NIO (including LeDao and Firefly). In September, Li Auto was also surpassed by NIO, falling out of the top 5 among new - energy vehicle startups for two consecutive months.
The decline in Li Auto's sales is due to multiple internal and external factors. Internally, it is in the product rhythm adjustment period during the transformation stage. Externally, it comes from the continuous erosion of market share by strong competitors such as Wenjie and the irresistible downward trend of the entire extended - range market.
All signs indicate that as a "transitional" product to pure - electric vehicles, extended - range vehicles have successfully completed their historical mission. Although many car companies have further expanded the extended - range market with the innovation of "large battery + small fuel tank" this year, it will most likely become a niche market in the future.
The core reasons are, first, the development of pure - electric technology, including the rapid progress of battery density and ultra - fast charging technology. Currently, the mainstream pure - electric models in the market generally have a cruising range of over 500 kilometers, and ultra - fast charging for 10 - 20 minutes can replenish enough energy for a range of over 300 kilometers, which makes "range anxiety" no longer a widespread concern for users. Second, it is the impact of policies. Many cities such as Shanghai have begun to cancel the free green license plate qualification for plug - in hybrid and extended - range vehicles.
This is where Li Auto's "sense of urgency" in the pure - electric market comes from. It's hard to say how long the popular cycle of the L - series can last. To ensure the quality of growth, Li Auto must gradually transform to pure - electric vehicles, even if it means sacrificing some short - term profits.
A bumpy road to pure - electric vehicles
MEGA completed its "rebirth" in one year. Li Auto should have advanced smoothly on the pure - electric path, but the i - series missed a year and may have also missed the best window period.
In the large six - seat pure - electric market, the i8 can be said to be born at the wrong time. On one hand, it was pre - emptively targeted by the LeDao L90, which adopted a low - price + battery - swapping strategy in a do - or - die battle. On the other hand, it was sandwiched between the pure - electric version of the Wenjie M8 and the Tesla Model YL.
Judging from the market reputation, the i8 inherits Li Auto's consistent quality and tuning, but this is not well reflected in sales. The rapid changes in the market have obviously disrupted Li Auto's rhythm. Nearly a week after the i8 was launched, Li Auto urgently announced a unified configuration version, simplifying the previous three versions into one and changing the refrigerator, VLA and other configurations from optional to standard.
The i6, launched at the end of September, is regarded as the most important volume - selling product of Li Auto this year. For this reason, Li Xiang broke his previous statement that "Li Auto will not invite celebrity endorsements. We believe more in the product itself", and chose Jackson Yee as the brand spokesperson. The purpose is to further expand the user group, and for the first time, clearly target young people in addition to the basic group of family users.
Judging from the entire release rhythm and configuration pricing strategy of the i6, it shows a more mature and confident Li Auto. This product skipped the pre - sale stage and was launched directly upon release. After fully learning from the lessons of the i8, the i6 has only one model in the whole series, with standard air suspension, refrigerator and VLA, and a direct reduction of 10,000 yuan during the first - sale period, with a price of less than 240,000 yuan.
It can be said that the i6 has shown Li Auto's sufficient sincerity. On the night of its release, Li Auto's US - listed stocks rose more than 5% in pre - market trading, and then declined all the way, closing down 5.6%, which is the same as when the i8 was launched. On the night of the i8's release, Li Auto's US - listed stocks rose 6% in pre - market trading and closed down more than 6%.
The price of the i6 seems to be "unappealing to both sides". For many on - the - fence users, this price is not "explosive" enough and not as attractive as the LeDao L90. For investors who have been following Li Auto for a long time, this price is a compromise of "trading price for volume".
Obviously, the market does not regard the release of the two new pure - electric models as good news, which stems from concerns about gross profit and product internal competition. To cope with market competition, the gross profit margin of the i6 is significantly lower than that of the extended - range series. Li Xiang also admitted that the i6 has the lowest gross profit margin among all models. Some investors estimate that even if the monthly sales reach 15,000 units, calculated at a net profit of 30,000 yuan per vehicle, the i6 will only contribute an incremental profit of 5.4 billion yuan for the whole year, which is difficult to offset the possible decline of the L - series.
Therefore, the slowdown of Li Auto in the capital market is essentially a conflict between short - term financial indicators and long - term strategic goals. The market is more concerned about the impact of pure - electric products on the overall profit margin rather than the absolute growth of sales volume. This is the trouble of the "excellent student" Li Auto, but not a concern for XPeng and NIO at this stage.
From the current situation, Li Auto still holds a "slow - burning" attitude towards the i8 and i6. Just like MEGA, Li Auto hopes that these two products can also gradually increase in volume through word - of - mouth fermentation, which mainly stems from absolute confidence in product capabilities.
Conclusion
The sales of extended - range vehicles are nearly halved, and the pure - electric vehicles have not achieved the expected big explosion, but Li Auto does not seem impatient. On one hand, the production capacity has to climb step by step. On the other hand, the slow - burning strategy needs more time to be verified.
Although it can be foreseen that Li Auto's third - quarter report will probably be very ugly, this pain is a necessary price for the pure - electric route. Li Auto, which reaped a lot of benefits from extended - range vehicles in the early days, needs to "make up" for the tuition of pure - electric vehicles.
Currently, the i6 is gradually gaining momentum. Relevant people said that the i6 is the product of Li Auto with the fastest - rising popularity. Internal news is that the sales of the i6 have exceeded those of the L9 when it was first launched. Even Li Auto's employees in delivery, after - sales and other departments are collectively snapping up the i6.
In terms of user reviews, many test - drivers have given positive evaluations of the i6's space performance, handling and intelligent driving ability. Even the widespread voice of "ugly appearance" at the time of launch has now been gradually replaced by "it looks better the more you look at it".
For Li Auto, this year is a very important "exam" year and a threshold that must be crossed after the ebbing of the extended - range vehicle dividend. If the i6 and i8 can achieve a stable "slow - burning" growth as Li Xiang expects, Li Auto will still have good stories to tell in the capital market in the future. If the increment of pure - electric products is not enough to recover the "lost ground" of extended - range vehicles, then Li Auto may only be able to hope for earlier achievements in the AI field.
This article is from the WeChat official account “guangzi0088” (ID: TMTweb), author: Xu Zhi. It is published by 36Kr with authorization.