Core Viewpoint - The article discusses the recent organizational restructuring at Li Auto, focusing on the adjustments made to its sales and service system, which aims to enhance operational efficiency and user satisfaction. Group 1: Organizational Changes - Li Auto has announced the dissolution of its previous "Five Major Sales Regions" structure, opting for a direct management approach from headquarters over 23 regions nationwide [2][5]. - The restructuring includes the creation of two new departments: "Sales Operations" and "Marketing," with leaders appointed to streamline resource allocation and support frontline operations [5][6]. - This marks the third adjustment to the sales and service system since 2025, indicating a trend towards refining management practices within the company [5][6]. Group 2: Management Strategy - The new management structure reverts to a "provincial leader system," where each province has a designated leader reporting directly to headquarters, aiming to improve clarity and efficiency in operations [6][7]. - The decision to return to this management style was influenced by challenges faced under the previous regional management system, which led to uneven resource distribution and operational issues [6][7]. - The restructuring is seen as a proactive internal adjustment rather than a response to external criticism, with a focus on enhancing user experience and operational effectiveness [6][7]. Group 3: Market Impact - Following the announcement of these changes, Li Auto's stock saw an increase of over 3% by the close of trading on August 13 [7].

Group 1 - Li Auto has adjusted its annual sales target from 700,000 units to 640,000 units, indicating a shift in strategy amid increasing competition in the Chinese electric vehicle market [2][4] - The company plans to reduce the production target for its range-extended L series from at least 560,000 units to 520,000 units, while significantly increasing the target for pure electric products from 50,000 units to 120,000 units [4] - The adjustment reflects a strategic response to the competitive landscape, as Li Auto's sales performance has been impacted by traditional automakers and new entrants focusing on plug-in hybrid and range-extended products [4][5] Group 2 - In the first four months of the year, Li Auto delivered 126,803 units, a year-on-year increase of only 19.41%, the lowest among its peers [7][8] - The company must deliver over 70,000 units monthly for the remainder of the year to meet the original target, which is considered nearly impossible, prompting the downward adjustment [8] - Li Auto's proactive strategy includes enhancing its pure electric vehicle lineup and restructuring its sales and service teams to better address market challenges [10][12] Group 3 - The shift towards range-extended and pure electric vehicles has become a consensus in the industry, with competitors like Zeekr and Xpeng also planning to launch range-extended models [5] - Li Auto's internal adjustments and strategic focus on pure electric vehicles indicate a significant shift in its operational priorities, aiming to balance its product offerings in a rapidly evolving market [10][12] - The company is also expanding its infrastructure, planning to increase its supercharging stations to 4,000 and its retail outlets to over 800, targeting lower-tier cities [10][12]

Investment Rating - The investment rating for the company is downgraded to Neutral with a target price of HKD 93.62, reflecting a potential downside of 17.3% from the current price of HKD 113.20 [1][7][8]. Core Insights - The company's fourth-quarter automotive gross margin fell below expectations at 19.7%, primarily due to a decrease in average selling price (ASP) and an increase in per-vehicle costs, including provisions for purchase commitments and promotional activities [2][8]. - Total revenue for the fourth quarter increased by 3.3% quarter-on-quarter, while net profit rose by 25.2% to RMB 3.5 billion, supported by RMB 400 million in interest income [2][8]. - The company faces significant challenges in sales growth, cost control, and market competitiveness, leading to uncertainties in revenue growth and gross margin for 2025 [2][8]. Financial Overview - Revenue projections for the company are as follows: RMB 123.85 billion in 2023, RMB 144.46 billion in 2024, and RMB 157.98 billion in 2025, with year-on-year growth rates of 173.5%, 16.6%, and 9.4% respectively [3][16]. - Net profit is expected to decline from RMB 11.70 billion in 2023 to RMB 8.03 billion in 2024, before slightly increasing to RMB 8.56 billion in 2025 [3][16]. - The company’s gross margin is projected to decrease from 22.2% in 2023 to 19.7% in 2025, indicating pressure on profitability [17]. Sales and Market Competition - The company anticipates first-quarter sales between 88,000 and 93,000 vehicles, with March sales estimated at 32,000 to 37,000 vehicles, reflecting the impact of recent price cuts [2][8]. - The competitive landscape is intensifying with new entrants in the extended-range vehicle segment, which may affect the company's market share and sales volume [8][9].