Current Developments Surrounding Li Auto's Shares
Li Motors, leading among China's up-and-coming EV brands, shipped out 58,513 vehicles for December 2024, marking a 16.2% rise compared to the previous year. Sales also surged roughly 20% from November's figures. The company surpassed the 500,000-vehicle mark in total deliveries for the year, setting a new accomplishment for Li Motors. Nevertheless, its growth rate lagged behind both major competitors. Nio shares reported a delivery volume of 31,138 units, a 73% increase from the previous year, while Xpeng sales reached 36,695 vehicles, seeing a strong 82% year-over-year rise.
Despite Li Motors not disclosing the major factors driving its growth, it's likely that the affordable Li L6, its entry-level model, has contributed to the surge in sales. Launched in April, the vehicle costs around RMB 250,000 (or about $34,500). Moreover, Li Motors has also been improving its autonomous driving technology, which is further boosting sales. The company promised an over-the-air update to its self-driving system in January to enable both city and highway autopilot capabilities. Additionally, the price wars between major EV players like Tesla and BYD have caused other companies to offer better discounts. For instance, Li Motors introduced a financing promotion at the end of November, offering customers a 3-year, 0% interest incentive on any Li Motors vehicle purchased within 2024.
Li Motors stock has experienced slow growth in recent times, yet the Trefis Top-Notch Portfolio, comprising 30 stocks, has delivered better returns with reduced risk compared to the S&P 500 index over the past 4 years; offering a smoother ride as demonstrated by HQ Portfolio performance metrics. What's next for Li Motors stock?
Li Motors shares are priced at around $24 per share, equating to 1.2x the projected 2024 revenues. This is reasonably priced, considering that revenues are predicted to grow by around 18% in 2024 and 33% in 2025, according to consensus estimates. In comparison, EV leader Tesla trades at roughly 13x its estimated 2024 revenues, despite the likelihood of nearly flat revenues. However, Li Motors faces challenges such as intense competition in China's EV market, which is putting pressure on its average selling prices and margins with more than 100 brands vying for market share. The company is also experiencing a change in its sales mix, as sales of lower-priced L6 models increase while fewer premium models like the Li L7, Li L8, and Li L9 sell, resulting in a decline in average selling prices. Furthermore, Li Motors' first purely electric model, the MEGA van, has not performed as expected, as its sales are below expectations. Li Motors originally planned to launch more purely electric models in 2024 but has postponed these plans to 2025. For a deep dive into how Li Motors stack up against rivals Nio and Xpeng, check out our analysis: *Nio, Xpeng & Li Auto: Comparing Chinese EV Stocks*.
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The Trefis Top-Notch Portfolio, which includes Li Motors stock, has demonstrated better returns with reduced risk compared to the S&P 500 index over the past 4 years. In the context of Li Motors' stock, Trefis analysts believe that its current price of around $24 per share is reasonably priced, considering the projected 18% growth in revenues for 2024 and 33% growth in 2025. However, Li Motors auto revenues, as projected, are lower than those of Tesla, despite Li Motors' Li L6 model contributing to the surge in sales due to its affordable price.
