Li Auto Revenue Goal Disappoints as Competition Heats Up

(Bloomberg) — Li Auto Inc. forecast first-quarter earnings that were below analyst estimates amid intensifying competition in China, the world’s largest auto market.

Revenue will probably be 23.4 billion yuan ($3.2 billion) to 24.7 billion yuan this quarter, the carmaker said in a statement Friday. That compares with the 38.4 billion yuan that analysts were expecting.

The company anticipates first-quarter vehicle deliveries will be as high as 93,000 units, also falling short of analyst projections.

While Li Auto’s focus on extended-range electric vehicles for families has been key to its success since its inception a decade ago, the company now faces intensifying competition. It’s vying for market share with rivals such as Aito, the new-energy vehicle brand developed by Huawei Technologies Co. and Seres Group Co.

Li Auto’s foray into battery-electric vehicles with its multipurpose car has also encountered challenges that have forced it to adjust sales targets and pricing strategies, as well as slim down its workforce.

In a bid to diversify its portfolio, Li Auto is venturing into fully electric sport utility vehicles through two new models, the i8 and i6, which are slated for launch later this year, Chief Financial Officer Li Tie said on the earnings call on Friday. Those models will face stiff competition, including from BYD Co., which is trying to popularize intelligent driving, and Xiaomi Corp., which has an aggressive pricing strategy for premium cars.

Despite disappointing analysts with its first-quarter projections, the company’s earnings for the last three months of 2024 were better than expected, aided by cost management and price cuts. These measures, however, weighed on the gross margin, which dropped to 20.3% from 23.5% a year earlier.

Li Auto will join other Chinese automakers in expanding overseas this year, executives said on the call. 

Earlier this year, the company set up an overseas expansion unit, and has already established after-sales hubs in Kazakhstan, Uzbekistan and the United Arab Emirates. The automaker is also eyeing North America, Europe and the Asia-pacific region, the executives said.

(Updates with executive comments from earnings call.)

More stories like this are available on bloomberg.com

  • Aniket Pujari

    Aniket Pujari

    Aniket Pujari, a graduate in Financial Markets, is the founder of Minute To Know News, a digital platform providing daily news updates on cryptocurrencies, finance, and economics. With a passion for finance and technology, Aniket has been exploring the world of cryptocurrencies since 2015, building a deep understanding of these rapidly evolving industries.

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