Li Auto has regained the top position among new energy vehicle startups.
In June, Li Auto delivered 47,774 new cars, a year-on-year increase of 46.7%.
From Li Auto’s perspective, this is the first time since the start of 2024 that monthly sales have surpassed 40,000 units, getting close to their historical best of 50,000 units in a single month.
Compared to the industry, Li Auto has reclaimed its leading position among new energy startups. Whether it’s AITO or AITO’s HarmonyOS-powered vehicles, their delivery volumes in June did not surpass Li Auto.
It is clear that after an unfavorable Q1, Li Auto has regained its footing in Q2.
Despite disruptions to their development rhythm and continuous impacts from AITO, Li Auto has maintained its core market, albeit at a significant cost.
The capital market is also weighing the pros and cons.
In Q1, following the release of MEGA, Li Auto’s total market value dropped from nearly HKD 400 billion to below HKD 200 billion. Even with sales growth in May and June, the market value did not significantly improve during this period.
In Q1, Li Auto’s sales were surpassed by AITO for three consecutive months.
This situation caused Li Auto to fall from its pedestal, compounded by the failed transition to the pure electric MEGA model, leading to market doubts about its future development.
However, Li Auto has proven itself.
After reflecting on and adjusting its development strategy, Li Auto has returned to the right track.
In April, Li Auto delivered 25,787 new cars, compared to AITO’s 25,086 new cars. Although Li Auto surpassed AITO, it did not exceed the 29,632 new cars delivered by HarmonyOS-powered vehicles that month.
In May, Li Auto delivered 35,020 new cars, a year-on-year increase of 23.8%. AITO delivered 27,119 new cars, while HarmonyOS-powered vehicles delivered 30,578 new cars, allowing Li Auto to completely surpass the “Huawei system.”
By June, Li Auto delivered 47,774 new cars, a year-on-year increase of 46.7%. AITO delivered 42,780 new cars, achieving a historical high, while HarmonyOS-powered vehicles delivered 46,141 new cars.
From the data, it is clear that both Li Auto and AITO experienced strong growth in Q2. Li Auto emerged as the winner, reclaiming the top position among new energy startups in Q2. Industry insiders familiar with Li Auto know the significance of this title to the company.
Moreover, the trend of nearly 50,000 monthly sales in June gives Li Auto a glimpse of hope in achieving its annual sales target.
At the beginning of the year, Li Auto boldly announced an annual sales target of 800,000 for 2024, based on its strong performance in 2023. This target was quickly revised down to 480,000 units.
As of the first half of the year, Li Auto has delivered 189,000 new cars. To meet the annual target of 480,000 units, it will need to average around 50,000 units per month in the second half of the year.
If the June delivery volume continues, Li Auto has a high chance of achieving this goal.
Price-for-volume strategy Li Auto’s growth in Q2 was mainly due to a price-for-volume strategy.
On the one hand, amid the car price war and continuous impact from AITO, Li Auto announced on April 22 that the 2024 models of Li L7, L8, L9, and MEGA would adopt a new pricing system, with all L7, L8, and L9 models reduced by 18,000-20,000 yuan.
On the other hand, Li Auto began delivering the more affordable L series models, specifically the L6, at the end of April. Priced between 249,800 and 279,800 yuan, the L6 became the main force for Li Auto’s volume increase.
In May, Li Auto delivered 35,020 new cars, with the L6 model accounting for 13,417 units, replacing the L7 as the best-selling model, with 38% of the total sales.
In June, Li Auto delivered 47,774 new cars, with the L6 model accounting for 23,517 units, making up 49% of the sales and contributing more than 80% of the month-over-month increase.
The data clearly shows that the L6 became the main driving force for Li Auto’s sales growth in Q2, especially in May and June. As production capacity gradually increased, the L6’s sales proportion within Li Auto expanded, serving as the absolute engine for month-over-month growth.
However, this also lowered Li Auto’s profit margins.
Li Auto’s vehicle sales revenue in 2023 was 120.29 billion yuan, with an average unit price of 320,000 yuan. However, with the price reduction of the original L series products and the increasing sales proportion of the L6, the average unit price of Li Auto may drop below 300,000 yuan this year.
Some investors noted that while Li Auto’s sales performance in June was excellent, almost returning to the historical peak of 50,000 units per month in December last year, revenue will be significantly impacted.
Nevertheless, Li Auto had no other choice.
Without the new L6 model, and still relying on the L7/8/9 models, Li Auto’s sales in April, May, and June would have been 26,381, 21,603, and 24,257 units, respectively. It would not only fail to outperform AITO but also significantly decline compared to the same period last year.
In other words, the L6 saved Li Auto.
Cannibalizing its own market? With the introduction of the lower-priced L6, there are concerns that it might cannibalize the market share of Li Auto’s original L series models, particularly the L7.
Both the L6 and L7 are five-seat SUVs. The L7 measures 505019951750mm in length, width, and height, while the L6 measures 492519601735mm, with only slight differences of 125mm, 35mm, and 15mm, respectively.
Price-wise, the L6 is Li Auto’s first product priced below 300,000 yuan, starting 70,000 yuan cheaper than the L7, with some useful but not essential features, like air suspension and electric suction doors, removed.
There are concerns in the market that the L6’s popularity might divert potential L7 buyers.
However, the data indicates that while this trend exists, its extent is acceptable.
In Q1, Li Auto delivered 32,570 L7 units. In Q2, 30,680 L7 units were delivered, a decrease of 1,890 units quarter-over-quarter. This indicates that the L6’s introduction did indeed divert some of the L7’s market share, but the impact was not significant.
On the other hand, the L8 and L9 models experienced more significant quarter-over-quarter declines.
In Q1, Li Auto delivered 20,910 L8 units. In Q2, 16,437 L8 units were delivered, a 22% decrease, reducing by 4,437 units. In Q1, 23,693 L9 units were delivered. In Q2, 19,477 L9 units were delivered, an 18% decrease, reducing by 3,949 units.
Clearly, this is not a good sign.
On the one hand, it is well-known that the domestic auto sales have seasonal cycles, with Q1 typically being a low point, followed by rising sales throughout the year, peaking in Q4. However, the L8 and L9 models experienced significant quarter-over-quarter declines in Q2, indicating that their future performance might not be promising.
On the other hand, Li Auto’s advantage in the high-end market is being gradually eroded by AITO.
Although Li Auto resisted AITO’s strong market position with the L6, it is gradually losing ground in the high-end luxury market.
In June, AITO’s M9 achieved a new high, delivering 17,241 units, firmly securing the top spot for models priced over 500,000 yuan. As a competitor, the M9’s monthly deliveries are approaching those of the Li L9. Compared to the declining L9, the M9 continued to grow strongly in Q2.
The situation is not optimistic, and it remains to be seen how Li Auto will respond in the future.
Credit:36Kr Auto
