- Revenue: RMB31.7 billion, up 10.6% year over year and 23.6% quarter over quarter.
- Vehicle Sales Revenue: RMB30.3 billion, up 8.4% year over year and 25% quarter over quarter.
- Gross Margin: 19.5%, down from 21.8% year over year and 20.6% quarter over quarter.
- Vehicle Margin: 18.7%, down from 21% year over year and 19.3% quarter over quarter.
- Operating Expenses: RMB5.7 billion, up 23.9% year over year and down 2.7% quarter over quarter.
- R&D Expenses: RMB3 billion, up 24.8% year over year and down 0.7% quarter over quarter.
- SG&A Expenses: RMB2.8 billion, up 21.9% year over year and down 5.5% quarter over quarter.
- Income from Operations: RMB468 million, down from RMB1.6 billion year over year and up from a loss of RMB584.9 million quarter over quarter.
- Operating Margin: 1.5%, down from 5.7% year over year and up from negative 2.3% quarter over quarter.
- Net Income: RMB1.1 billion, down 52.3% year over year and up 86.2% quarter over quarter.
- Diluted Net Earnings per ADS: RMB1.05, down from RMB2.18 year over year and up from RMB0.56 quarter over quarter.
- Cash Position: RMB97.3 billion as of June 30, 2024.
- Net Cash Used in Operating Activities: RMB429.4 million, down from net cash provided of RMB11.1 billion year over year and down from net cash used of RMB3.3 billion quarter over quarter.
- Free Cash Flow: Negative RMB1.9 billion, down from positive RMB9.6 billion year over year and up from negative RMB5.1 billion quarter over quarter.
- Vehicle Deliveries: 108,000 units in Q2, up 25.5% year over year.
- Market Share: 14.4% in the RMB200,000 and higher NEV market, up from 13.6% in Q1.
- Retail Stores: 487 stores in 146 cities as of July 31, 2024.
- Servicing Centers: 411 centers in 220 cities as of July 31, 2024.
- Supercharging Stations: 733 stations with 3,428 stalls as of August 27, 2024.
- Q3 2024 Vehicle Deliveries Outlook: 145,000 to 155,000 units.
- Q3 2024 Revenue Outlook: RMB39.4 billion to RMB42.2 billion.
Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Li Auto Inc (LI, Financial) achieved strong sales performance in Q2 2024, delivering over 108,000 vehicles, a 25.5% year-over-year increase.
- The company recorded total revenues of RMB31.7 billion, up 10.6% year over year, with a healthy gross margin of 19.5%.
- Li Auto Inc (LI) reached multiple delivery milestones, including surpassing 900,000 cumulative deliveries in August 2024.
- The company has made substantial progress in autonomous driving, with the rollout of HD-mapless NOA to over 240,000 users and high user engagement rates.
- Li Auto Inc (LI) continues to expand its sales and servicing network, with 487 retail stores and 411 servicing centers as of July 31, 2024.
Negative Points
- Vehicle margin in Q2 2024 was 18.7%, down from 21% in the same period last year, primarily due to different product mix and pricing strategy changes.
- Operating expenses increased by 23.9% year over year to RMB5.7 billion, impacting overall profitability.
- Net income in Q2 2024 was RMB1.1 billion, down 52.3% year over year, despite an 86.2% increase quarter over quarter.
- Free cash flow was negative RMB1.9 billion in Q2 2024, compared to positive RMB9.6 billion in the same period last year.
- The company faces ongoing competition from brands like Huawei, which could impact market share and sales growth.
Q & A Highlights
Q: How quickly will Li Auto evaluate the return and efficiency of its investment in end-to-end autonomous driving technology? What metrics should investors use to assess this?
A: (Xiang Li, CEO) Our investment yield on autonomous driving has always been high. Key metrics include user willingness to use and pay for it, as shown by increasing daily active rates and mileage driven. The percentage of users taking NOA on test drives has doubled, and the AD Max take rate has approached 70% for cars priced above RMB300,000.
Q: Could management comment on the ongoing competition between Li Auto and Huawei?
A: (Xiang Li, CEO) HIMA is our biggest competitor, and we expect to coexist healthily in the long term. We continually learn from Huawei's R&D systems and methodologies, which is critical for us as a startup.
Q: Did you maintain a full-year 20% gross margin guidance? Will the third-quarter gross margin return to 20%?
A: (Tie Li, CFO) We believe our vehicle margin will be over 19% and the total gross margin will be above 20% in the third quarter.
Q: How does Li Auto plan to maintain or improve sales volume in the second half of the year without new model launches?
A: (James Liangjun Zou, SVP) We will optimize store deployment and strengthen online lead generation. Increased publicity of autonomous driving features has facilitated sales growth, particularly for AD Max models. We aim to grow our market share in the RMB200,000 and higher NEV market to 16% in the last quarter.
Q: What is Li Auto's view on the future of end-to-end autonomous driving and robotaxi trends?
A: (Xiang Li, CEO) Our end-to-end VLM model has exceeded expectations, with rapid iterations and increased data for training. We plan to launch a 10,000-user scale testing program in September. As we reach Level 4 autonomous driving, the demand for ride-hailing and taxis may decrease.
Q: How has the competitive environment in the high-end market evolved recently?
A: (James Liangjun Zou, SVP) Our robust sales performance is due to our product strength and adaptability. We have ramped up online marketing and revolutionized our sales system, giving more empowerment to regional levels. The NEV penetration rate in the RMB200,000 and higher market has reached over 50%, and we believe Li Auto will be a main beneficiary.
Q: What are the preparations for the BEV models next year?
A: (Xiang Li, CEO) We plan to launch multiple 800-volt high voltage pure electric vehicles in 2025. R&D and supply-chain readiness are on track, with sufficient production capacity to meet sales targets. We are confident in delivering our BEV models next year.
Q: How has the reallocation of model display in channels to maximize product mix and exposure to high-end models like L8 gone?
A: (James Liangjun Zou, SVP) The number of display spots for L8 has gradually recovered, and its monthly deliveries have improved to the range of 6,000 to 7,000 units.
Q: What is the full-year R&D expense guidance?
A: (Tie Li, CFO) We expect the full-year GAAP R&D expenses to be below RMB12 billion.
Q: Can you share more about the logic behind the changes in the distribution network and preparations for the launch of EV models next year?
A: (James Liangjun Zou, SVP) We are increasing the proportion of stores in auto parks, aiming to display all models in our showrooms. The number of showroom vehicles per store has increased, and we plan to further increase this metric to cover six units per store by the end of this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
