Li Auto forecasts first-quarter sales drop as competition sharpens in Chinese EV market, reports record profit

The Beijing-based carmaker said on Monday that it could deliver between 100,000 and 103,000 EVs in the January to March period, a decline of 21.9 to 24.1 per cent from the 131,805 units delivered in the previous quarter.

The bearish forecast was revealed after Li Auto reported a record quarterly profit that beat analysts’ expectations. The company posted a net income of 5.75 billion yuan (US$799 million) in the three months ending December 31, up 104.5 per cent quarter on quarter. It also more than doubled a median forecast of 2.8 billion yuan made by analysts in a Bloomberg survey.

“Premium EV makers like Li Auto are under pressure to achieve a high sales volume now that consumers are becoming more cautious amid a slowing economy,” said Gao Shen, an independent analyst in Shanghai.

Li Auto delivered 376,030 premium EVs to mainland Chinese customers in 2023, a jump of 182 per cent year on year that exceeded its sales target of 300,000. The company broke its monthly sales record for nine consecutive months between April and December.

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Last month, however, Li Auto handed over 31,165 vehicles to buyers, a 38.1 per cent decline from the all-time high of 50,353 units it recorded in December.

EV sales in mainland China grew by 37 per cent year on year in 2023, but Fitch Ratings has forecast that sales will expand by only 20 per cent this year.

Moreover, most carmakers are set to offer discounts and engage in a price war to retain their market shares in 2024, Cui Dongshu, general ­secretary of the China Passenger Car Association, said early this month.

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“Top Chinese EV builders are set to offer price cuts to maintain their market share this year, because the competition has become fiercer,” Gao said.

For instance, CMB International said in a research report in January that Li Auto would reduce its average selling prices by 3 per cent this year, with its gross margin hitting 20.7 per cent, down 1.5 percentage points from 2023.

On February 18, BYD, the world’s largest EV maker, launched a new version of its plug-in hybrid, the Qin Plus DM-i, with prices starting at 79,800 yuan, 20 per cent below the previous edition.

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On Monday, BYD said it had received 23,590 orders for the new version of the Qin Plus during the first week of presales.