Shares of Chinese electric vehicle (EV) maker Li Auto Inc (理想汽車) have more than doubled from last year’s low and are tipped for further gains even as a slowing economy and price war hamper its rivals.
The Beijing-based automaker unexpectedly reported profits for the past two quarters by churning out a regular lineup of new models and keeping costs contained.
Analysts remain bullish: Citigroup Inc predicts the firm’s shares would climb another 88 percent by the end of the year, while Morgan Stanley raised its price target by more than 40 percent this month.
Photo: Bloomberg
Li Auto has outpaced its peers by introducing a new model in each quarter since the middle of last year, much faster than competitors such as XPeng Inc (小鵬汽車) and Nio Inc (蔚來汽車). The revamped product lineup helped revenue surge by 96 percent last quarter, while deliveries rose to a record 52,584.
“The order intake has been much stronger than the market had expected, thanks partly to the intensive model launches,” said Joanna Chen, an analyst at Bloomberg Intelligence in Hong Kong. “Li Auto’s sales volume will continue to beat XPeng and Nio this year, as the latter are still in a phase of product switch.”
Li Auto’s Hong Kong-listed shares closed at HK$112 yesterday, having climbed from last year’s low of HK$53.55 set on Oct. 31. Their 109 percent rally over the period compares with a 23 percent gain in Xpeng, and a 19 percent loss for Nio.
A price war is heating up in China’s EV industry as the costs of batteries fall from last year’s highs. Tesla Inc and BYD Co (比亞迪) have both announced plans to cut vehicle prices, effectively squeezing industry margins, although analysts see Li Auto ideally positioned to weather the intensifying competition.
The price wars are mainly in the mass-market segment around a selling price of 100,000 yuan to 150,000 yuan (US$14,122 to US$21,183), “but Li Auto is selling cars far above that range,” said Vincent Sun, an analyst at Morningstar Asia Ltd in Singapore. “Secondly, if you look across the board, there are actually not too many models to choose in mid-to-large-sized premium SUVs [sport utility vehicles].”
Unlike its rivals, Li Auto has focused on designing and manufacturing extended-range electric vehicles, which use gasoline engines to add to the distance possible for their electric motors.
The company is also expected to introduce its first purely electric-powered vehicle later this year to complement its existing range of hybrid cars.
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