LI AUTO(LI) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q4 2022 were RMB 17.65 billion ($2.56 billion), representing a year-over-year increase of 66.2$2.5 billion), up 66.4% year-over-year and 90.9% quarter-over-quarter [21] - Gross profit for Q4 2022 was RMB 3.57 billion ($517.1 million), growing 49.8$38.5 million), a decrease of 10.2% from RMB 295.5 million in Q4 2021 [25] - Free cash flow was RMB 3.26 billion ($472.3 million) in Q4 2022 [26] Business Line Data and Key Metrics Changes - The company delivered 46,319 new vehicles in Q4 2022, with annual deliveries reaching 133,246 units for 2022 [8] - The L9 model dominated the full-size SUV monthly sales chart since its release, while the L8 became the top seller of all large SUVs in December 2022 [8][9] - The company aims for a 20% market share in the RMB 300,000 to RMB 500,000 premium SUV segment in 2023 [12] Market Data and Key Metrics Changes - The penetration rate of new energy passenger vehicles in China reached 31.7% in Q4 2022, up from 14.8% in 2021 [7] - The company ranked first in both the SUV and NEV market in the price range of RMB 300,000 to RMB 500,000 as of December 2022 [9] Company Strategy and Development Direction - The company plans to continue focusing on R&D and enhancing product intelligence, with a commitment to developing core EREV and BEV technologies in-house [19] - The company is expanding its retail network, operating 296 retail stores and 320 service centers as of January 31, 2023 [14] - A modularized approach to supply chain management is being adopted to balance cost and risk [13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving deliveries between 52,000 and 55,000 vehicles in Q1 2023, representing a year-over-year increase of 64% to 73.4% [27] - The company anticipates continued improvements in battery pricing, which is expected to positively impact margins [33] - Management acknowledged challenges in the second half of 2022 but emphasized improvements in resource allocation and operational systems [31] Other Important Information - The company has made significant advancements in R&D, particularly in electric drive units and smart space technologies [15][16] - The L7 model was launched on February 8, 2023, with deliveries expected to start in early March [10] Q&A Session Summary Question: What is the basis for the delivery target of 25,000 to 30,000 vehicles? - Management confirmed that the target is based on internal goals and expected to be reached in Q2 2023 [29] Question: What are the factors affecting battery procurement costs and margins? - Management indicated that battery costs are expected to decrease, benefiting the industry and the company [33] Question: What is the outlook for gross margin given the product mix? - Management noted that the gross margin is healthy and consistent with guidance, with expectations for improvement as supply chains ramp up [36] Question: How does the company plan to differentiate its upcoming BEV models? - Management emphasized the importance of charging infrastructure and cost efficiency in their EV strategy [39] Question: What is the expected sales contribution from Shanghai and the impact of license plate policies? - Management noted a recovery in orders from Shanghai and expects market share to stabilize similar to Beijing [46] Question: How does the company evaluate potential cannibalization among its SUV models? - Management reported clear differentiation in user bases among the L7, L8, and L9 models, with minimal overlap [52]