Key facts
- Li Auto reported a second-quarter operating loss of 2.3 billion yuan ($342 million).
- Revenue for the quarter decreased by 15.1% year-on-year to 25.7 billion yuan.
- Vehicle deliveries fell 11.5% to 98,000 units in the second quarter.
- Gross margin compressed significantly to 7.9% from 20.5% in the prior year.
- The company projected second-quarter deliveries between 95,000 and 100,000 vehicles.
Li Auto reported a second-quarter operating loss of 2.3 billion yuan ($342 million), a significant downturn attributed to intense competition and evolving consumer preferences in China's electric vehicle market. The company's revenue for the period declined 15.1% year-on-year to 25.7 billion yuan, with vehicle deliveries dropping 11.5% to 98,000 units.
This follows a first-quarter net loss of RMB 2.3 billion ($319 million), a stark contrast to the profit recorded a year prior. The margin squeeze was exacerbated by aggressive pricing strategies during a model refresh cycle, including the rollout of the entry-level Li i6 sedan and preparations for the redesigned flagship L9 SUV. Gross margin plummeted to 7.9% from 20.5% a year ago, with vehicle margin falling to 6.1% from 19.8%.
Looking ahead, Li Auto projected second-quarter deliveries between 95,000 and 100,000 vehicles, falling short of analyst consensus. Revenue guidance for the second quarter was set between RMB 24.1 billion and RMB 25.4 billion. The company anticipates a gross margin improvement to around 10% in Q2, contingent on the L9's production ramp and easing raw material costs. Despite these challenges, Li Auto maintained its full-year sales growth target of 20%, expecting the new L9 and upcoming L8 models to drive significant volume growth in the latter half of the year. The company has also been investing in its charging infrastructure, expanding to over 4,000 supercharging stations. Li Auto ended the quarter with substantial cash reserves of RMB 94.3 billion.