Li Auto (NASDAQ:LI) has emerged as a robust EV stock in the global market, offering a compelling investment opportunity as the sector matures. As the EV market shifts towards mainstream adoption, overcoming initial challenges and concerns is a common trajectory in any industry, including EVs. This has special implications for LI stock.
Amid prevailing market apprehension, investors are urged to shift focus from fear to concrete figures. Li Auto defies concerns with remarkable performance, delivering a historic 40,422 vehicles in October and showcasing more than 300% year-over-year growth. Projections indicate substantial upside potential for LI stock.
Driven by Strong Deliveries
In October, Chinese luxury EV manufacturer Li Auto excelled, delivering 40,422 vehicles, a remarkable fourfold year-over-year surge and an increase from September’s 36,060 units. Li Auto’s three SUV models, incorporating gasoline generators with batteries, continue to witness strong demand, securing the top spot in SUV sales above RMB300,000 for six consecutive months.
The cumulative 2023 deliveries reached 284,647, marking a 194% year-over-year increase. In the same period, Li’s competitor XPeng delivered 20,002 vehicles, a nearly fourfold year-over-year rise and a 30% increase from the previous quarter. In comparison, Nio delivered 16,074 vehicles, reflecting a 60% year-over-year growth, potentially influenced by price cuts in Q2.
Better Than Tesla
Li Auto outpaced Tesla’s (NASDAQ:TSLA) China sales in October, selling 40,422 vehicles compared to Tesla’s 28,626, as per the China Passenger Car Association. Li Auto anticipates maintaining this momentum, projecting 41,700 to 42,600 monthly deliveries in Q4.
Li Auto, distinct from Tesla’s electric cars, features SUVs with a unique approach — a built-in fuel tank for battery charging, addressing range anxiety. In February 2024, the company aims to launch its first all-electric model, the MEGA. Additionally, three more electric vehicles are slated for H2 2024.
The company’s current vehicle prices range from 319,800 yuan to 459,800 yuan, while Tesla’s Model 3 and Model Y start at 259,900 yuan and 263,900 yuan, respectively. The ongoing competition in sales between Li Auto and Tesla remains uncertain. In September, Tesla sold 43,507 cars, outpacing Li Auto’s 36,060. China contributes about one-fifth of Tesla’s sales by value, with the U.S. making up around 46%. Elon Musk expressed concerns about the potential impact on earnings and revenue in the third quarter of 2023.
Excellent Revenue Growth
Li Auto exceeded third-quarter revenue expectations, driving a 3% stock increase. The electric vehicle manufacturer reported Q3 revenue of $4.75 billion, a significant year-over-year growth of 271.3%, adapting to market demands. CEO Xiang Li emphasized synergy in production, supply, and sales.
Smart electric SUVs and expanded services like charging stalls fueled Li Auto’s sales surge. In Q3, the company delivered 105,108 units, a 296.3% year-over-year increase. CEO Xiang Li proudly announced Li Auto as China’s first new energy automaker to achieve 500,000 cumulative deliveries.
Li Auto’s robust performance extends to its stock, with a year-to-date return of 92.9%, far surpassing the S&P 500’s 15.7%. The CEO remains optimistic, projecting Q4 deliveries between 125,000 and 128,000 vehicles, with total revenues estimated at $5.27 billion to $5.4 billion, showcasing remarkable growth.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
