Li Auto (LI) Q2 2025 Earnings Call August 28, 2025 08:00 AM ET Speaker0Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's Second Quarter twenty twenty five 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, Ms.Janet Zhang, Investor Relations Director of Li Auto. Please go ahead, Janet.Speaker1Thank you, Darcy. Good evening and good morning, everyone. Welcome to Li Auto's s ...

Summary of Li Auto's Q1 2025 Earnings Call Company Overview - **Company**: Li Auto - **Industry**: New Energy Vehicles (NEV) in China Key Financial Performance - **Q1 2025 Deliveries**: 92,000 vehicles, a 15.5% year-over-year increase [2][3] - **Total Revenues**: RMB 25.9 billion (approximately $3.6 billion), up 1.1% year-over-year [17] - **Vehicle Sales Contribution**: RMB 24.7 billion (approximately $3.4 billion), up 1.8% year-over-year [17] - **Vehicle Margin**: 19.8%, reflecting cost reduction and pricing strategy changes [2][18] - **Gross Margin**: 20.5%, slightly down from 20.6% year-over-year [19] - **Net Income**: RMB 6.466 billion (approximately $89.1 million), a 9.4% year-over-year increase [23] Market Position and Growth - **Market Leadership**: Li Auto has been the sales champion in the Chinese NEV market for vehicles priced above RMB 200,000 for 14 consecutive months, achieving a market share of 14.1% in April 2025 [3][24] - **Q2 2025 Delivery Expectations**: Anticipated delivery volumes between 123,000 and 128,000 units, driven by strong order inflows [7][10] Innovations and Product Launches - **New Models**: Introduction of refreshed Li Mega and new L series models with upgraded chips and enhanced features [2][4] - **Li Mega Home Launch**: Launched at the Shanghai Auto Show, catering to multi-generational families, accounting for over 90% of orders for this model [5][6] - **Upcoming Releases**: Plans to enter the high-end pure electric SUV market with models VI8 (July) and VI6 (September) [8][11] Charging Infrastructure Development - **Supercharging Network**: Establishing a network of 2,350 stations with over 12,800 charging stalls covering 50,000 km of highways, with plans to reach 4,000 stations by year-end [12][8] Research and Development - **R&D Expenses**: RMB 2.5 billion (approximately $346.4 million), down 17.5% year-over-year [20] - **ADAS Technology**: Development of next-generation VLA driver model integrating advanced intelligence for enhanced user experience [13] Strategic Outlook - **Market Expansion**: Plans to expand into tier-4 and tier-5 cities, targeting an additional 100,000 incremental sales by 2026 [32] - **Export Strategy**: Focus on Asian and European markets, aiming for overseas sales to constitute 30% of total sales [35] Additional Insights - **User-Centric Approach**: Emphasis on understanding family users' needs and innovating around mobile space experiences [37] - **Cost Management**: Operating expenses decreased by 14% year-over-year, reflecting improved operational efficiency [21] Conclusion Li Auto demonstrates strong growth in the NEV market, driven by innovative product launches and strategic expansion plans. The company is well-positioned to capitalize on the growing demand for electric vehicles in China and beyond, with a focus on enhancing user experience and establishing a robust charging infrastructure.

Financial Data and Key Metrics Changes - In Q1 2025, total revenues were RMB 25.9 billion, up 1.1% year over year but down 41.4% quarter over quarter [17] - Vehicle sales contributed RMB 24.7 billion, an increase of 1.8% year over year but a decrease of 22.1% quarter over quarter [18] - Gross profit was RMB 5.3 billion, up 0.6% year over year but down 40.7% quarter over quarter [18] - Vehicle margin improved to 90.8% from 90.3% year over year, while gross margin was 20.5%, slightly down from 20.6% year over year [19] - Net income was RMB 89.1 million, up 9.4% year over year but down 81.7% quarter over quarter [21] Business Line Data and Key Metrics Changes - The company delivered over 92,000 vehicles in Q1 2025, a 15.5% increase year over year [8] - The new Li Mega Home model accounted for over 90% of Li Mega orders since its launch, indicating strong market acceptance [10] - The company plans to increase production capacity to achieve 2,500 to 3,000 monthly deliveries by July [11] Market Data and Key Metrics Changes - Li Auto held a 14.1% market share in the RMB 200,000 and above NEV market in April 2025, reinforcing its leadership position [9] - The overall NEV market over RMB 200,000 is expected to reach approximately 3.8 million units in 2025, with 2.1 million being BEVs [36][46] Company Strategy and Development Direction - The company aims to become a top-tier player in the premium BEV market, with a robust pipeline for new models [11] - Li Auto is expanding its sales and servicing network, targeting growth in Tier four and Tier five cities through the STAR program [16][48] - The company is committed to enhancing its competitive edge in the charging network, planning to deploy over 2,500 supercharging stations by June [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving monthly deliveries of the new L series returning to 50,000 units soon [27] - The company anticipates Q2 2025 deliveries to be between 123,000 to 128,000 units, reflecting a year-over-year increase [11][23] - Management emphasized a user-centric approach driven by innovation to enhance product strength and user satisfaction [16] Other Important Information - Li Auto has built the largest urban highway supercharging network in China, covering over 50,000 kilometers of highways [12] - The company is actively developing its ADAS technology, with plans to launch the VLA driver model in July [14][64] Q&A Session Summary Question: How will Li Auto maintain sales growth against aggressive competition? - Management reported that the new L series has shown healthy growth, with weekly sales exceeding 10,000 units and a market share of 14.7% in the NEV market [27] Question: When will Li Auto consider selling sedans? - Management indicated that after reaching a revenue scale of RMB 300 billion, they will review market conditions and user demand for launching sedan models [29] Question: What is the intelligence level of Li HelloOS and its cost implications? - Management highlighted strong interest in HaloOS from various industry players, which is expected to enhance cost efficiency and product iteration [33] Question: What are the key selling points of the upcoming i8 model? - The i8 will feature innovative styling, high voltage charging technology, and is expected to be a top choice for NEV owners looking to upgrade [42] Question: What is the outlook for the export business? - Management stated that entering overseas markets is part of their long-term strategy, aiming for 30% of overall sales to come from international markets [58]

Financial Data and Key Metrics Changes - In Q1 2025, the company delivered over 92,000 vehicles, a year-over-year increase of 15.5%, resulting in total revenues of RMB 25.9 billion [7][17] - Total revenues increased by 1.1% year-over-year but decreased by 41.4% quarter-over-quarter [17] - Vehicle sales contributed RMB 24.7 billion, up 1.8% year-over-year but down 22.1% quarter-over-quarter [17] - Gross profit was RMB 5.3 billion, up 0.6% year-over-year but down 40.7% quarter-over-quarter [18] - Net income was RMB 89.1 million, up 9.4% year-over-year but down 81.7% quarter-over-quarter [21] Business Line Data and Key Metrics Changes - The Li L Series continues to lead in the eREV segment, with a market share of 14.1% in April 2025 [8] - The new Li Mega Home model accounted for over 90% of Li Mega orders since its launch, indicating strong user recognition [9][10] - The company plans to increase production capacity to achieve 2,500 to 3,000 monthly deliveries by July 2025 [11] Market Data and Key Metrics Changes - The company has maintained its position as the sales champion among Chinese auto brands for 14 consecutive months [7] - The overall NEV market over RMB 200,000 is expected to reach approximately 3.8 million units in 2025, with 2.1 million being BEVs [48][37] Company Strategy and Development Direction - The company aims to become a top-tier player in the premium BEV market, with a robust pipeline for upcoming models [11] - The launch of the Li Mega Home reflects the company's focus on multi-generational family mobility needs [9] - The company is expanding its sales and servicing network, targeting growth in Tier 4 and Tier 5 cities through the STAR program [16][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving monthly deliveries of the new L series returning to 50,000 units soon [27] - The company expects Q2 2025 deliveries to be between 123,000 to 128,000 units, reflecting a year-over-year increase [11][23] - Management emphasized the importance of user-centric innovation and the integration of AI in future vehicle experiences [70] Other Important Information - The company has built the largest urban highway supercharging network in China, with plans to expand to 4,000 stations by the end of the year [12] - The Li Halo OS has been open-sourced to empower industry partners and foster progress [15] Q&A Session Summary Question: How will Li Auto maintain sales growth against aggressive competition? - Management noted that the new L series has shown healthy growth, with weekly sales exceeding 10,000 units and a market share of 14.7% in the NEV market [27] Question: When will Li Auto consider selling sedans? - Management indicated that after reaching a revenue scale of RMB 300 billion, they will review market conditions and user demand for launching sedan models [29] Question: What is the intelligence level of Li HelloOS and its cost implications? - Management highlighted strong interest in HaloOS from various industry players and emphasized its advantages over traditional operating systems [35] Question: What are the key selling points of the upcoming i8 model? - The i8 will feature innovative styling, high voltage charging technology, and is expected to be a top choice for NEV owners [44] Question: What is the company's target leverage ratio and payable cycle? - Management aims to maintain payable days between two to four months, ensuring healthy relationships with suppliers [41] Question: What are the expectations for the export business? - Management stated that entering overseas markets is part of their long-term strategy, aiming for 30% of overall sales to come from international markets [62]