What's Happening With Li Auto Stock?

Core Viewpoint - Li Auto, a leading electric vehicle (EV) manufacturer in China, reported a year-over-year delivery increase of 16.2% in December 2024, reaching 58,513 vehicles, but lagged behind competitors Nio and Xpeng in growth rates [1][2]. Group 1: Delivery Performance - Li Auto delivered over half a million vehicles in 2024, marking a significant milestone for the company [1]. - The December deliveries represented a 20% increase from November [1]. Group 2: Competitive Landscape - Nio and Xpeng reported much higher delivery growth rates of 73% and 82% year-over-year, respectively [1]. - The intense competition in the Chinese EV market is affecting Li Auto's average selling prices and profit margins, with over 100 brands competing for market share [3]. Group 3: Product and Pricing Strategy - The launch of the Li L6, priced at approximately RMB 250,000 (about $34,500), is likely a key driver of Li Auto's sales growth [2]. - Li Auto is enhancing its autonomous driving capabilities, with an over-the-air update planned for January to integrate city and highway autopilot features [2]. - A promotional financing incentive of three years at zero percent interest was introduced to boost vehicle sales [2]. Group 4: Financial Metrics - Li Auto's stock trades at about$24 per share, approximately 1.2 times the consensus revenue for 2024, which is considered reasonable given the expected revenue growth of 18% in 2024 and 33% in 2025 [3]. - In contrast, Tesla's stock trades at about 13 times its estimated 2024 revenue, despite stagnant revenue projections [3]. Group 5: Challenges Ahead - The shift in sales mix towards lower-priced models like the L6 is contributing to a decline in average selling prices [3]. - Li Auto's first purely electric model, the MEGA van, has not met expectations, leading to a deferral of plans for additional purely electric models from 2024 to 2025 [3].