(Bloomberg) – Li Auto Inc. predicts first-quarter earnings are below analyst estimates, an intensified competition in the world’s largest auto market.
The automaker said in a statement Friday that revenue for the quarter could be 23.4 billion yuan ($3.2 billion) to 24.7 billion yuan. Compared with the 38.4 billion yuan expected by analysts.
The company expects vehicle delivery to reach 93,000 in the first quarter, with no analyst forecasts.
Li Auto’s focus on expanding electric vehicles for homes has been key to its success since its inception a decade ago, but the company now faces intensified competition. It is competing for market share with competitors like AITO.
Li Auto, with its utility vehicle business, has also encountered challenges in entering battery electric vehicles, forcing it to adjust its sales targets and pricing strategies and reduce its labor force.
To diversify its portfolio, Li Auto ventures into all-electric running vehicles with two new models I8 and i6, which is scheduled to be launched later this year, Chief Financial Officer Li Tie said on Friday’s earnings call. These models will face fierce competition, including from Byd Co., which is trying to popularize intelligent driving, and Xiaomi, which has an aggressive pricing strategy for advanced cars.
Despite disappointing analyst forecasts for the first quarter, the company’s earnings in the last three months of 2024 were better than expected, with the help of cost management and price cuts. However, the gross margin weight of these measures fell to 20.3% from 23.5% in the same period last year.
Li Auto will expand overseas with other Chinese automakers, executives said on the phone.
Earlier this year, the company established an overseas expansion unit and has established after-sales hubs in Kazakhstan, Uzbekistan and the United Arab Emirates. The automaker also focuses on North America, Europe and Asia Pacific, executives said.
(Updated with executive comments from earning phone calls.)
More stories like this are available Bloomberg.com
