Li Auto Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 9, 2023

There are 11 speakers on the call.

Operator

Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's Third Quarter 2023 Earnings Conference Call. At this time, all participants are in listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Koby Wang, the Head of Capital Markets of Li Auto.

Operator

Please go ahead, Koby.

Speaker 1

Thank you, operator. Good evening and good morning, everyone. Welcome to Li Auto's Q3 2023 earnings conference call. The company's financial and operating results were published in a press release earlier today and are posted on the company's IR website. On today's call, we will have our Chairman and CEO, Mr.

Speaker 1

Shawn Li and our CFO, Mr. Johnny Keh Li Begin with prepared remarks. Our President, Mr. Dong Hui Ma and Senior VP, Mr. James Liang Jun Zhou will join for the Q and A discussion.

Speaker 1

Before we continue, please be reminded that today's discussion will contain Forward looking statements made under the safe harbor provision of the U. S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties. As such, the company's actual results may be different from the fields expressed today. Further information Regarding risk and uncertainties, it's included in certain company filings with the U.

Speaker 1

S. SEC and the Hong Kong Stock Exchange. The company doesn't assume any obligation to update Any forward looking statements except as required under applicable law. Please also note that Li Auto's earnings price Release price and this conference call include a discussion of unaudited GAAP financial information as well as unaudited Non GAAP financial measures. Please refer to the authors disclosure, the comments on the IR section of our website, which contain a reconciliation of unaudited non GAAP measures comparable GAAP measure it.

Speaker 1

Our CEO will start his remarks in Chinese. There will be English translation after he finish With that, I will now turn the call over to our CEO, Mr. Shang Li. Please go ahead.

Speaker 2

Hello, everyone, and welcome to today's earnings conference call. In the Q3 of 2023, despite the intense competition in China's NEV market, we maintained strong growth momentum propelled by our compelling product lineup and strong execution. Total deliveries for the quarter surpassed 105,000 vehicles, Almost 4 times the volume for the same period last year, setting another new quarterly delivery record. By the end of September, we have delivered our 500,000 Li Auto vehicles, becoming the fastest Chinese emerging new automaker to reach this benchmark. Moreover, in October, Li Auto achieved another new milestone with over 40,000 monthly deliveries.

Speaker 2

According to the insurance registration data of China Automotive Technology and Research Center, LIE L9 maintained its position as the full size Sales Champion during the quarter. Well, L7 and L8 continued to occupy the first and second spots in the large SUV market, respectively. We remain one of the top 3 NEV brands priced over RMB 200,000 in China, while our market share continued to grow, reaching 15.4% In NUV brands priced over RMB 200,000 in China, compared with 10.9% in the 1st quarter and 13.7% in the 2nd quarter. We believe that our L Series Robust growth momentum together with deliveries of our upcoming BEV models next year will enable us to accelerate the large scale Turning over to our financial performance. Our rapid scale growth has driven continued cost reduction, resulting in steady improvements across multiple financial metrics.

Speaker 2

Total revenues for the Q3 were RMB34.68 billion, up 271.2 percent year over year. Our net income and free cash flow increased to RMB2.81 billion and RMB13.22 billion respectively, both hitting new historical highs. Notably, our cash position reached RMB 88,520,000,000 as of the end of the Q3. Our healthy operations reaffirms our strong operational 5C BEVs is just one great example of our achievements made through R and D investments. With respect to production, In October, our Changzhou manufacturing base completed its capacity expansion and is now well positioned for its production increase in Q4.

Speaker 2

In terms of supply chain management, continue to break through the component supply chain bottleneck by the enhanced supply chain management strategies, improved processes and more efficient collaboration with our suppliers. We expect total deliveries in the Q4 to be between 125,000 to 128,000 units. Now I would like to talk about Lee Mega. Lee Mega can gain up to 500 kilometers of driving range with a 12 minute charge and features an industry leading silhouette. Its market reception has exceeded our expectations.

Speaker 2

Li Mega's extremely large interior space meets the travel needs of large Chinese families. At the same time, Its unique body style and silhouette are intended to reach the perfect balance between interior space and energy consumption. It is the most aerodynamic NPV in the world with a drag coefficient of only 0.215. Based on our 800 volt BEV platform, MEGAT is capable of 5C charging with a peak charging power exceeding 5 20 kilowatts, Higher than any other passenger vehicle in production in the world. Li Mega is targeted for launch in December 2023.

Speaker 2

Showroom vehicles are scheduled for debut at our retail stores in January 2024 and deliveries will commence in February. We will share more details about Omega during our product launch event this December. In the meantime, we have been making progress With our 5 c supercharging network expansion, to date, we have built and started operating 130 supercharged stations along highways nationwide. We expect to establish 300 highway supercharging stations by the end of this year, covering 4 major economic zones, including The Beijing Tianjin He Bay Economic Belt, the Yangtze River Delta region and the Greater Bay Area and Sichuan Chongqing Economic Belt. Going forward, we will further accelerate the rollout to increase nationwide highway coverage, while also actively building urban supercharging stations, thereby greatly improving users' energy replenishment experiences across all scenarios.

Speaker 2

Moving on to autonomous driving. Our City NOA and on our ADMAX platform continue to progress smoothly. We expect to push the official version of AD Max 3.0 by the end of this year with full scenario and only function. Meanwhile, the AD Pro 3.0's official version will be released in the first half of next year. By then, part of AD Max algorithm capability will also be available on AD Pro.

Speaker 2

We're confident that Lee Auto will become a market proven 1st year player in Driving market in the first half of next year. Turning to the development of our direct sales and servicing efforts. As of October 31, 2023, we have 372 retail stores in 133 cities. Moving to the Q4, we will continue to accelerate our network expansion, aiming to cover over 400 stores across 140 cities nationwide, Further increasing Li Auto's market share in China's new energy automotive market. Last but not least, I would like to share some details regarding our accomplishments in ESG.

Speaker 2

In September, our company has upgraded was upgraded to the highest AAA rating by MSCI ESG Research, making Li Auto the 1st Chinese automaker ever to receive this rating. The rating validates our steadfast efforts across corporate governance, product safety and quality, cleantech development and organizational organization and talent among other areas. Moving forward, we'll continue to uphold our value proposition of providing outstanding products and services that exceed our family users' needs as we constantly push the limits of growth. With that, We'll turn it over to our CFO, Johnny, for a closer look at our financial performance.

Speaker 3

Thank you, Xia. Hello, everyone. I will now walk you through some of our 2023 Q3 financials. Due to time constraints, I will address financial highlights and encourage you to refer to our earnings press release for further details. Total revenues in the Q3 were RMB34.6 $8,000,000,000 or $4,750,000,000 up 2 100 and 71.2 percent year over year and 21% quarter over quarter.

Speaker 3

This included revenue from vehicle sales, RMB33.62 billion or US4.61 billion dollars up 271.6 percent year over year and 20.2% quarter over quarter, Revenue from other sales and services were RMB1.06 billion or US145.7 million dollars in the 3rd quarter, growing 258.7 percent Year over year and 56.2 percent quarter over quarter. The increase was mainly Due to the increased sales of accessories and provision of services in line with higher Accumulated vehicle sales as well as increased sales of charging stores in line with higher vehicle deliveries. Cost of sales in the Q3 was RMB27.03 billion or US3.71 billion dollars Up 231.3 percent year over year and 20.6 percent quarter over quarter. Gross profit in the 3rd quarter was RMB7.62 billion or US1.05 billion dollars growing 546 point 7% year over year and 22.6% quarter over quarter. Vehicle margin in the 3rd quarter was 21.2% compared with 12% in the same period last year and 21% in the prior quarter.

Speaker 3

Excluding the impact of inventory provision and the losses on purchase Commitment related to V1 in the Q3 of 2022, the vehicle margin remained stable over The Q3 of 2022. Gross margin in the Q3 was 22% Compared with 12.7% in the same period last year and 21.8% in the Last quarter, operating expenses in the 3rd quarter were RMB5.31 billion or US727.1 million dollars growing 60.2% year over year and 15.1% quarter over quarter. R and D expenses in the 3rd quarter were RMB2 point $82,000,000,000 or $386,100,000 up 56.1% year over year and 16.1% quarter over quarter, primarily driven by increased employee compensation Portfolio expansion and technology advancement. SG and A expenses in the 3rd quarter were RMB2.5 $4,000,000,000 or $348,700,000 up 68.8 percent year over year and 10.2% quarter over quarter, Primarily driven by increased employee compensation as a result of our growing number of staff as well as increased rental expenses associated with our sales and service Servicing network expansion. Income from operations in the 3rd quarter was RMB 2,340,000,000 or $320,600,000 Compared with RMB2.13 billion loss from operations in the same period last year And growing 43.9 percent from RMB1.63 billion income from operations in the last quarter.

Speaker 3

Net income in the Q3 was RMB2.81 billion of US385.5 million dollars compared with RMB1.65 RMB65 1,000,000,000 net loss in the same period last year, an increasing 21 point 8% from RMB2.31 billion net income in the Q2 of this year. And now turning to our balance sheet and cash flow. Our cash position remains strong and stood at RMB88.52 billion or US12.13 billion dollars As of September 30, 2023, net cash provided by operating activities In the Q3 was RMB14.51 billion or US1.99 billion dollars Free cash flow was RMB13.22 billion or 1 point $81,000,000,000 in the 3rd quarter. And now for our business outlook. For the Q4 of 2023, the company expects the deliveries to be between 125,000 and 128,000 vehicles, representing an increase of 169.9 percent to 170 6.3% from the Q4 of 2022.

Speaker 3

The company also expects 4th quarter total revenues to be between RMB38.46 billion And RMB39.38 billion, representing an increase of 100 and 17.9 percent to 123.1 percent from the Q4 of last year. This business outlook reflects the company's current and preliminary view on its business situation and market condition, which is subject to change. This concludes our prepared remarks. I will now

Operator

For the benefit of all participants on today's call, Please limit yourself to 2 questions. And if you have additional questions, you can reenter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, Then follow with English translation. Your first question comes from Tim Chen Xiao with MS. Please go ahead.

Speaker 4

So my first question is about the margin. Despite Q3 margin beat, Li Auto has been scaling up the vehicle discount and benefits since Late quarter and most of the promotions seem to continue in Q4. As there are more competitive models coming to the YSG in the following months And the entire team to take on the auto. Would the company consider to respond with more aggressive promotions or spec upgrade to your current lineup? And with that effect, the autos vehicle margin in 4th quarter and beyond, so in short, should we still consider 20% plus a reasonable And the substantial level for vehicle gross margin against such a tough competition backdrop?

Speaker 4

That's my first question. Thank you.

Speaker 3

Thank you, Tim. This is Johnny. I think for every quarter and every year, we will take Full consideration between sales volume growth and the gross margin when we plan our Sales policy and promotion policy. As and also every quarter, Our sales policy will also

Speaker 2

add our

Speaker 3

Supply chain effort, which absorbed some of the sales policy promotion. So I still want to emphasize the from the company's operation side. Each quarter and every year, we want to keep our gross margin above 20%. We believe that will be A healthy margin to keep enough money on hand to invest on Either R and D and also their service network expansion for the future. Thank you.

Speaker 4

So my second question is about autonomous driving. The auto industry is now attaching greater importance to its development Of smart driving and planning to increase the overall investment. So could management team help us to quantify the auto investment plan in autonomous driving? Like how much you are going to spend in 2024 2025? And how many people are you planning to hire?

Speaker 4

And in the meantime, What would be the best way for investors to track the progress? For example, when will Li Auto to Do we need to open NOA function to all public users across the cities? And will you keep offering such function for free After more Sasquatch investment this year? That's my second question. Thank you.

Speaker 2

This is Mr. Madong Hui. First of all, on a strategic level, the company has always been very focused on investments in autonomous driving. In the fall strategy summit of our company, we had a thorough discussion around autonomous driving and reached consensus To make making smart tons driving leading in the market, our core strategic goal. So the company will continue to increase our investments in autonomous driving.

Speaker 2

At this point, the R and D And over 2,500 by the end of 2025. As the scale and talent density of our R and D team growth, We will develop technology as well as product at the same time. On the one hand, we will continue to deploy our AD Products across multiple vehicle lines, across multiple scenarios are deploying NOA in multiple scenarios. On the other hand, we will continue to invest in AI algorithms of Atoms driving as well as other cutting edge technology. In terms of investments, we will continue to increase the amount of investments in vehicles and testing, computing power and personnel.

Speaker 2

Our ample cash reserve and cash flow will be a very strong support for our continued investments. In terms of progress, as Liqiang mentioned earlier, we plan to deploy AD Max 3.0 software on all of our MAX, our vehicles equipped with AD MAX, providing full scenario NOI features Using the same BEV architecture and we will also be adding valet parking feature to our AD Max users. At the same time, in the first half of twenty twenty four, we will be releasing AD Pro 3.0 to our Pro users. Part of the AD Max algorithms will be deployed on AD Pro and the capability of autonomous driving will also be significantly improved. We're confident to become one of the top tier 1 players in the market that is proven by the market.

Speaker 2

In terms of product lineup strategies, we will continue to make AD standard on all of our vehicles, which allows us to have the largest training fleet of autonomous driving vehicles in the country and also More training mileage, which will accelerate the deployment and iteration of our foundational models algorithms.

Speaker 4

Thank you very much for sharing all the details. Super helpful. Thank you.

Operator

Your next question comes from Tina Hu with Goldman Sachs. Please go ahead.

Speaker 5

Okay. So thank you management for taking my question and congratulations on very strong set of results. So I have two questions. The first one is, As we are expanding our footprint into more and more cities, so how does management view the different type of customer need or demand In higher tier city versus lower tier city for both EREV product as well as BEV product? And how does Liato plan to adjust And is regarding your supply chain as well as cost reduction plan.

Speaker 5

So wondering if our supply chain bottleneck has been completely resolved at this And how do we going forward, how do we best manage the supply chain to be able to fulfill our growing demand. Related to that is, do we have any Cost reduction plans and target over the next few years. And lastly is the over the next 2 years, what is our capacity plan as well as our CapEx guidance. Thank you.

Speaker 6

Okay. Tina, this is James. And I will take your first question. In the SUV market priced over 300,000, our market share in our well developed cities reached 50% And in some of the cities, while our average market share across the whole market is less than 20%, which means there's plenty of rooms for our future growth. Overall, we will continue to focus on 1st tier, new tier new first tier and second tier cities aiming to increase our market share In these top tier cities, currently we haven't reached market saturation in first 2nd Q2 cities and we will have huge growth potentials in those cities.

Speaker 6

In the RMB 300,000 and higher SUV market, the monthly sales of BBA Approximately 55,000 units in total. And if we consider the 2nd tier premium And automotive brand, which including BBN and other brand, and they're around 90,000 units, which means we have ample room to achieve our next stage of growth. Additionally, We have begun to accelerate our deployment in 3rd tier cities and speed up our Store openings in certain key 4th tier cities. And let me give you some numbers. As of today, we have more than 300 retail stores nationwide, among which there are more than they Have already more than 100 retail stores deployed in the 3rd tier and 4th tier cities.

Speaker 6

According to our current progress, we expect to have more than 100 And 10 retail stores in 3rd tier and 4th tier cities by end of this year. I hope I I have answered your first question. I will hand over to Mr. Ma for the second one.

Speaker 2

First of all, regarding supply chain bottleneck, all of the issues that we have encountered before have all been successfully resolved. As opposed to the Regarding new models and our sales target for next year, we have made ample preparations not only whole vehicle production capacity, but also parts supply. We have made medium to long term supply chain strategies to make sure that our Our cost reduction, our overall view is that OEMs should establish long term and stable Partnerships with our suppliers to achieve a mutually beneficial relationship for the two sides. For the short term, our short term Cost reduction measures will mostly be focused on business measures through Platformization, volume aggregation and cost accounting to drive our procurement costs to a reasonable level. For the medium to long term, we will look at the entire value chain from end to end to find ways to increase efficiency and reduce costs, Including from product, R and D, technology innovation, to drive down costs.

Speaker 2

At the same time, we'll also work with our suppliers help them digitize and industrialize, to increase the efficiency in the production process and reduce quality related costs. In terms of overall vehicle production capacity, we have 2 manufacturing base in Beijing and Changzhou, Three production lines in Changzhou dedicated to REV models, L9, L8 and L7 as well as L6, which will be launched next year. In Beijing, there is one production line dedicated to our BEV products. Our production capacity is Sufficient to meet the needs for sales and deliveries for the next 2 years.

Speaker 5

Thank you very much management for the clear answers.

Operator

Your next question comes from Jiang Xia with Barclays. Please go ahead.

Speaker 7

Thank you very much for taking my question and Big congrats on the very strong results. I mean competition has been on the top of the mind for many investors With recent launch by Huawei and Auto, of the sort of the larger SUVs And that SUV is also eREV and also the DANZA, the BYD's DANZA brand It's launching some of the large SUVs as well. I was wondering, could you share with us your thoughts around competition, Around customers buying behavior, you talked about market share earlier. Are you seeing any impact yet on market share And on your market positioning, thank you.

Speaker 6

Okay. John, this is James. I will take your question. So although this year the competition in the new energy vehicles market is relatively intense, We once again achieved impressive sales results. Our models retained strong sales momentum And each model is a blockbuster.

Speaker 6

Till now, the delivery of all our 4 models, including L9, L8 and L7 also has reached exceeded 100,000 units. And just like yesterday, our L7 has exceeded 100,000 units in less than 10 months This product launched in March this year. And also our sales have achieved a continuous growth while our share in the NEV market priced above RMB200,000 continued to rise From 10.9% in the 1st quarter to 15.4% in the 3rd quarter. And I can give you another number like in last month October, Our market share is already more than 17%. At present, the penetration rate Of the new energy vehicle market had exceeded 35% across the Innovation deficient gap to entering the early mass period.

Speaker 6

The concentration Effect of leading auto companies will become increasingly evident and our accumulated user base And the market share will support our further increase in delivery volumes and the market share gains. I hope I answered your questions.

Speaker 7

Thank you very much, James.

Speaker 6

Thank you.

Operator

Your next question comes from Zhu Yingbo with Scitech Securities. Please go ahead.

Speaker 8

My first Question is how we balance the technology advantage, especially when you mentioned about the low drag coefficient and balance that between and consumer recognition for market management, especially for blind order.

Speaker 2

Talk about MEGA and all of our BV Products. In terms of traditional values, including safety, features and comfort, Mega will continue to focus on families' needs and make sure that we will be the absolute best or among the absolute best in the industry. On top of that, all of our PEV products will have 3 breakthroughs. The first one is breakthrough on charging experience. It can provide up to 500 kilometers of range with 12 minutes of charging.

Speaker 2

And we will also be deploying large scale Charging stations on major highways in China. So any consumer can buy 1 of our BEV vehicles with total confidence about their charging experience. And secondly, as a breakthrough on interior room, with our high voltage pure electric Architecture, we will be able to completely redesign vehicle architecture to make sure that the interior space Our products are always the biggest among their segments, even reaching the level of next segment up, which provides the best interior experience for family users. And thirdly, all of our products will have a break In terms of styling and body style, all of our styling will be redefining each one of the traditional categories, whether it's MPV, SUVs We will be bringing design language from decades down the road and to launch them our existing vehicles as if they come They're only concept vehicles, but they're actually production vehicles that we'll launch into the market. Through these three break We'll be able to provide 3 very unique value to our customers.

Speaker 2

The first one is the sense of safety from Charging or the experience of charging. And the second is the sense of value from a very large interior space. And third is the sense of belonging from Very exciting styling. And all of our BV products will be following these three principles.

Speaker 8

My second question is how We see that the EV product become more and more homogeneous and more larger screens, more Smart interactions and controls, how we make EV product more differentiation? Thank you.

Speaker 2

I think my earlier response covered a lot of Your question and I just want to emphasize that our focus has always been on core user value. What makes the most creates the most value for our users. I think with the intense competition, as you mentioned, incremental changes are definitely taken for granted, whether it's lower price, whether it's more These are things we'll definitely do well in. But when we think about competition, we think it's really the way to stand out is to compete on the Higher dimension and to create really focus on the three values that consumers care about most. And taking 5 gs charging as an example, In our real time real world chart testing, even when the battery state of charge reaches 85%, it can still have a charging power Over 300 kilowatts, which is even higher than the maximum charging rate of many other competitors.

Speaker 2

This really established a new And that is only the result of years of innovation through products and R and D in our efforts. And that is something we will continue to invest in and continue to prove and create value for our users.

Operator

Your next question comes from Ming Sun Lee with BofA, please go ahead.

Speaker 9

So currently, Li Auto I see a lot of charging stations in China. So what is the difference on charging stations Within the cities and also on the highway. And in terms of your charging technology and also the user experience for you have been using, How do you want to differentiate from yourself and your competitor?

Speaker 6

Okay. Min, thanks for your question. This is James. I will take your question. At present, in urban areas, whether it is public charging or home charging, consumers Have good access to charging facilities that provide a decent charging experience.

Speaker 6

Therefore, for BVase, We must first tackle the most critical pain point and focus on fulfilling the need for rapid Energy replenishment during highway long distance travel. Through the construction support 500 kilometers driving range, we strive to eliminate consumers' worries around BEV purchases. Furthermore, with the launch and the delivery of the deliveries next year, we will also start the construction of Charging stations in cities. In addition, with respect to product experience, we will consider both the hardware And the software as a whole product, for example, when the new auto car owners is looking for a charging pile, The status of charging gun and charging pile can be checked on the infotainment system in the car. We also provide plug and play possible free payment among those services To provide a better experience for our users and for BE based batteries can be remotely preheated, We think from user experience perspectives aiming to help our users have a better charging experience.

Speaker 6

Okay. This is my answer.

Speaker 9

So, Yuto and also some other LED companies are the 1st generation startup in China. Currently, we are seeing more and more competitive peers to enter the market. For example, Huawei cooperate with a lot of Partners in China and also started to bring some good sales. Xiaomi will also launch the car in 24. So in your view for the longer term, how do you think of the market dynamic in China for EV

Speaker 2

How do we look at the competition from Huawei? And this is actually a question we have broad consensus across the company. When we look at Huawei, 80% of what we're thinking is how do we learn from them and 2% 20% is really respect And there's 0 complaint in fact. Because as we become a company that has We were still a startup company and as we reached the $100,000,000,000 revenue benchmark road milestone, We're actually very lucky and impressed to have a role model, which has done businesses on the scale of RMB 1,000,000,000,000. So we're very excited to Huawei along the way.

Speaker 2

And when we look internally in terms of how we want to weather storm and stand out intense competition, we look at really 9 areas across 3 broad categories. The first category is really the consensus across the company and that includes culture, brand, consumer brand and strategy. And the second category is our business operations, which covers from R and D, sales and services, supply chain and manufacturing. And lastly is back functions, which includes HR and organization, IT and processes and finance and operations. And To become a company that can really handle RMB 100,000,000,000 of revenue, we really need to excel in all areas.

Speaker 2

There can be any one shortcoming, And that will be the core foundation for any company that wants to reach the scale of 1,000,000 unit sales

Operator

Your next question comes from Jing Chen with CICC. Please go ahead.

Speaker 10

So my first question is about Short term question regarding the production ramp up and profitability of Mega. As our Beijing BEV platform And what is the early stage profitability level of Mega? And will it be a driving problem on our gross profit margin in the first and second quarter next year? And my second question is about our new product pipeline next year, Especially for the PV models, we know that there are 2 platforms, wheel and shock, and the former one Corresponds to maybe larger and more expensive models. So do you have any more information about their product positioning and in order to launch the market or the timing of the delivery.

Speaker 2

Speaking of challenge, MAGA will be our very first BV The vehicle and also the debut of our BEV platform, also in a new factory in Beijing as well as new production line. So there's definitely But at the same time, we think there are many opportunities for us to overcome the challenge. First of all, we have plenty of experience In rapid production ramp up, the L8, L9 and L7, all these 3 vehicles have ramped up pretty rapidly And reached very high different numbers within a short period of time. And as we look back at these experience, we've accumulated a lot of great experience In rapid production ramp up. At the same time, we've also worked with our suppliers to work through our NUDD parts, namely new, unique, Different and difficult.

Speaker 2

We have created very detailed quality control and production ramp up plants. In terms of personnel, we will frontload our recruiting and training to prepare for the start of production. Overall, we are Pretty confident that the ramp up of Mega will be relatively successful and it will be able to reach volume Immediately after it comes to market and after it will be able to be delivered immediately after the product launch and reach Volume in the meeting after its first delivery. Mega will be officially launched in December. And at the beginning of production ramp up, we would Gross margin will very rapidly recover to a very healthy level.

Speaker 3

Yes.

Speaker 2

Mr. Li Xiang, to answer the question on product line, next year we will be launching 4 completely new models, which creates a record for since the company's beginning. In the first half, we'll be launching another large SUV product cater towards younger families called the L6. And in the second half, we'll have 3 BEV models. The rate and the method of launch will be

Operator

As we are reaching the end of our conference call now, I'd like to turn the call back over to management for any additional or closing comments.

Speaker 1

Thank you once again for joining us today. If you have any other questions, please feel free to contact Ligoutiao's IR team. Thank you. Have a good one. Bye bye.

Operator

That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Key Takeaways

  • Li Auto set a new quarterly delivery record with over 105,000 vehicles in Q3—nearly four times last year’s volume—and reached 500,000 cumulative deliveries, the fastest for a Chinese emerging automaker; October deliveries topped 40,000.
  • Financials hit new highs with Q3 revenue of RMB 34.68 billion (up 271% YoY), net income of RMB 2.81 billion, free cash flow of RMB 13.22 billion, and a cash position of RMB 88.52 billion.
  • The Li Mega BEV will launch in December, offering up to 500 km range in 12 minutes of charging, a world-leading drag coefficient of 0.215, and 800 V 5C charging with peak power exceeding 520 kW.
  • Li Auto’s 5C supercharging network has grown to 130 highway stations, with a target of 300 by year-end across China’s major economic zones and plans to expand into urban areas.
  • Advanced driving programs continue to roll out with AD Max 3.0 full-scenario NOA by year-end and AD Pro 3.0 in H1 2024, alongside a sales network expansion to over 400 retail stores in 140 cities by Q4.
A.I. generated. May contain errors.
Earnings Conference Call
Li Auto Q3 2023
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