Li Auto’s Earnings Call: Growth Amid Challenges

Li Auto, Inc. ((LI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Li Auto’s recent earnings call presented a balanced sentiment, highlighting both impressive achievements and notable challenges. The company showcased strong year-over-year growth in vehicle deliveries and maintained a leading market position, despite facing quarter-over-quarter declines in revenue and deliveries due to seasonal factors. Li Auto’s resilience is evident through its ongoing product innovations and network expansions, which have helped offset some of the challenges faced during the quarter.

Strong Vehicle Deliveries

Li Auto delivered over 92,000 vehicles in the first quarter of 2025, marking a significant 15.5% increase year-over-year. The company has successfully maintained a robust market presence, capturing a 14.1% market share in April, which underscores its competitive edge in the automotive industry.

Revenue and Market Leadership

The company reported total revenues of RMB25.9 billion, demonstrating significant growth in the RMB200,000 and above NEV market in China. This growth rate is twice that of the market, reinforcing Li Auto’s leadership position in the premium segment.

Product Innovation and Launch

Li Auto continues to innovate with the launch of new models such as the Li MEGA Home and the new Li L Series. These models feature cutting-edge technologies, including NVIDIA’s Thor-U chip and ATL LiDAR sensors. The Li MEGA Home has been particularly successful, accounting for over 90% of orders and boasting a strong backlog.

Supercharging Network Expansion

The company is expanding its supercharging network, currently operating 2,350 stations with plans to increase this to 4,000 by the end of the year. This expansion will cover extensive urban and highway networks, supporting the anticipated launch of BEV models.

Net Income Growth

Li Auto reported a net income of RMB646.6 million for the quarter, marking a 9.4% increase year-over-year. Despite a quarter-over-quarter decrease, this growth highlights the company’s ability to maintain profitability in a challenging market environment.

Quarter-over-Quarter Revenue Decline

Total revenue experienced a 41.4% decline quarter-over-quarter, primarily due to seasonal factors associated with the Chinese New Year holiday. This decline highlights the impact of external factors on the company’s financial performance.

Decrease in Vehicle Deliveries

Vehicle sales revenue decreased by 22.1% quarter-over-quarter, driven by a reduction in vehicle deliveries. This decrease underscores the challenges faced by the company in maintaining consistent delivery volumes.

Operating Margin Decrease

The operating margin for the first quarter was 1.0%, a significant drop from 8.4% in the previous quarter, although it represents an improvement from the negative margin in the same period last year. This decrease reflects the pressure on profitability amid fluctuating market conditions.

Negative Free Cash Flow

Free cash flow was negative RMB2.5 billion in the first quarter, though this represents an improvement from the same period last year. This negative cash flow highlights the ongoing financial challenges the company faces as it invests in growth and expansion.

Forward-Looking Guidance

Looking ahead, Li Auto expects vehicle deliveries for the second quarter to range between 123,000 and 128,000 units, with anticipated revenues between RMB 32.5 billion and RMB 33.8 billion. This reflects a 2.5% to 6.7% year-over-year increase, indicating continued growth momentum. The company also plans to expand its supercharging network to 4,000 stations by year-end, supporting the launch of new BEV models.

In summary, Li Auto’s earnings call reflects a balanced sentiment with significant achievements in vehicle deliveries and market leadership, alongside challenges such as revenue declines and negative cash flow. The company’s forward-looking guidance suggests optimism for future growth, driven by product innovation and network expansion.