Li Auto (LI): Charging Ahead in the Electric Vehicle Race
38min read In the cutthroat world of electric vehicles (EVs), Li Auto Inc. (NASDAQ: LI) is proving it’s not just keeping up—it’s accelerating. With a 33.1% jump in deliveries to 500,508 units in 2024, Li Auto is now the first Chinese luxury NEV brand to crack the half-million annual sales barrier. But is this momentum enough to make LI a must-own stock? Let’s dive into the data.
The Growth Engine: Deliveries and Market Share
Li Auto’s Q1 2025 outlook is a masterclass in balancing ambition and realism. The company expects to deliver 88,000–93,000 vehicles, a 9.5%–15.7% year-over-year surge, despite a revenue dip. The key here isn’t just the numbers—it’s where Li Auto is aiming. The brand’s focus on the RMB200,000+ (US$28,000+) premium segment is paying off. In a market flooded with budget EVs, Li Auto is carving out a niche for tech-savvy, affluent buyers who want more than just a car—they want a connected, autonomous experience.
The Revenue Dip: A Necessary Trade-Off?
Revenue for Q1 2025 is projected to drop by 3.5%–8.7% compared to 2024, largely due to pricing strategies and shifts in product mix. But here’s the kicker: Li Auto isn’t sacrificing margins for growth blindly. The company has RMB112.8 billion ($15.5 billion) in cash reserves, giving it the flexibility to invest in R&D and infrastructure without burning through liquidity. Meanwhile, gross margins, though down to 20.5% in 2024 from 22.2% in 2023, remain healthy enough to fund expansion.
The Tech Edge: Autonomous Driving and Global Ambitions
Li Auto isn’t just building cars—it’s future-proofing them. Recent OTA updates (versions 6.5, 7.0, and 7.1) have added one-click autonomous driving, improved navigation systems, and safety features like the Sentry Mode High-Risk Video Preview. These aren’t just gimmicks; they’re differentiators in a market where Tesla and others are racing to dominate.
Then there’s the Munich R&D center, Li Auto’s first overseas hub, which signals its ambition to become a global player. By 2025, the company plans to roll out next-gen autonomous driving architecture and new BEV models, positioning itself to compete not just in China but in Europe and beyond.
The Risks? Manageable, Not Dealbreakers
Critics will point to the revenue decline and margin pressure. But let’s not forget: Li Auto’s Q4 2024 net income was RMB3.5 billion ($484 million), and its free cash flow, while down, remains positive at RMB8.2 billion ($1.1 billion). The company is also scaling its infrastructure—500 retail stores and 1,874 super-charging stations by early 2025—proving it’s not just selling cars but building an ecosystem.
Why Buy Now?
Li Auto is the ultimate “growth at a reasonable price” play. With cash reserves to weather short-term hiccups, a premium market segment with room to grow, and technology that’s leapfrogging competitors, this stock has the ingredients for a breakout.
The numbers back it up:
- 2024 deliveries: 500,508 units (+33.1% YoY)
- 2025 Q1 deliveries: 88,000–93,000 units (on track with Jan/Feb totals of 56,190)
- R&D investments: Growing, with Munich as a global tech hub
- Cash: RMB112.8 billion—a war chest for expansion
Conclusion: Li Auto (LI) is a Buy—But Mind the Market
Li Auto isn’t just surviving in the EV wars; it’s thriving. While revenue headwinds exist, they’re temporary and outweighed by the company’s cash strength, premium positioning, and technological leadership. With plans to expand its charging network to 4,000 stations by 2025 and launch new models, this is a stock primed to capitalize on the shift to electrification.
Action Alert: Li Auto (LI) is a Hold for long-term investors and a Buy on dips below $30. The EV market is volatile, but Li Auto’s fundamentals—cash, tech, and execution—are solid. In a sector where winners and losers are separated by fractions of a percentage point, Li Auto is in the winner’s circle.
Final word: Don’t let short-term noise drown out the long game here. Li Auto is charging ahead—and so should you.
