Li Auto , the largest of the emerging EV players in China, delivered 58,513 vehicles for December 2024, an increase of 16.2% year-over-year. Sales were also up by roughly 20% from November. Deliveries for the full year stood at a little over half a million vehicles, which is a new milestone for the company. However, Li’s growth rate was also behind both of its principal rivals. Nio stock reported deliveries of 31,138 vehicles, up 73% compared to last year, while Xpeng sold 36,695 vehicles, up a solid 82% year-over-year.
Although Li Auto doesn’t break down the key drivers of its growth, it’s quite likely that the Li L6, the most affordable model in the company’s lineup, has helped its volumes. The vehicle, which was launched in April, is priced at about RMB 250,000 (about $34,500). Separately, Li has also been making advancements to its autonomous driving system and this is also helping drive vehicle sales higher. The company said that it would offer an over-the-air update to its self-driving system in January to integrate both city and highway autopilot capabilities. Moreover, the price wars between major EV players Tesla and BYD have also prompted other players to offer better discounts. For example, Li Auto announced a new promotion toward the end of November offering customers a three-year, zero percent interest financing incentive on their purchase of any Li Auto vehicle through the end of 2024.
While Li Auto stock has seen lackluster growth over recent years, the Trefis High Quality Portfolio, with a collection of 30 stocks, has provided better returns with less risk versus the benchmark S&P 500 index over the last four year period; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. So what’s next for Li Auto stock?
Li stock trades at about $24 per share, about 1.2x consensus 2024 revenues. This is not expensive, considering that revenues are on track to expand by about 18% in 2024 and by about 33% in 2025, per consensus estimates. In comparison, EV bellwether Tesla trades at about 13x the estimated 2024 revenue, despite the fact the revenues are likely to remain almost flat. That said, Li does face some headwinds. Intense competition in the Chinese EV market is pressuring its average selling prices and margins, with over 100 brands vying for market share. The company is also experiencing a shift in its sales mix, with fewer premium models (Li L7, Li L8, and Li L9) and more sales of the lower-priced L6, contributing to a decline in average selling prices. Additionally, Li’s first purely electric model, the MEGA van, which comes without the gasoline range extender found in Li’s other vehicles, hasn’t quite lived up to expectations. Li Auto had initially planned to launch more purely eclectic models in 2024, but it has deferred these plans to 2025. See our analysis of Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for a detailed look at how Li Auto stock compares with its rivals Nio and Xpeng.
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