EV Stocks: Li Auto Sinks as Tesla’s Rival Police Experience Megafail

Li Auto (LI) on Thursday lowered its first-quarter delivery outlook due to sluggish demand for its first pure electric car. Li Auto shares tumbled, while other Chinese EV stocks fell in sympathy.




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EV Startup Slashes Delivery Prospects

The Chinese startup announced that it now expects to deliver 76,000 to 78,000 electric vehicles. That is 24% lower than the previous expectation of 100,000-103,000 deliveries.

Li Auto already delivered 51,416 vehicles in January-February. So the updated guidance means that the EV manufacturer expects to deliver 24,584-26,584 vehicles in March. That’s about half of the 50,000 it previously targeted.

In an unusually detailed mea culpa, Li tied reduced guidance to his first purely battery-electric vehicle, the Mega. Scroll below for more information.

On March 1, Li Auto priced its seven-seat all-electric minivan for 559,800 RMB ($77,764). That is almost double the price of the market leader General engines(GM) gas competitor, the GL8, according to the South China Morning Post.

It is also more expensive than the recently launched one XPeng (XPEV) X9 and the Denza D9, owned by BYD. Market watchers often see Li Auto as the closest rival Tesla (TSLA) in the Chinese premium electric vehicle market. It primarily makes extended-range electric vehicles (EREVs), a type of plug-in hybrid vehicle.

The size of the March shortage indicates some weakness for Li’s existing EREV range of SUVs, the L7, L8 and L9. Huawei-backed Aito is also expanding and focusing on Li Auto.

Li Auto Stock, China EV Stocks

Shares of Li Auto fell 7.5% to 31.53 on the stock market today. Additionally, Li Auto stock extended its decline below the 50- and 200-day moving averages.

Meanwhile, LI shares inched ahead of fourth-quarter earnings on Feb. 26, hitting another six-month high of 46.44 the next day. But shares wobbled on signs that Mega minivan orders were weak.

Starting rivals Nio (NIO) and XPeng fell nearly 2% and 3%, respectively, on Thursday. EV giants Tesla and BYD (BYDDF) also lost 1%-2%.

Amid an intensifying price war, all Chinese EV stocks and Tesla remain below their 200-day averages. Their 50-day lines are lagging their 200-day lines, which also reflects short-term weakness.

News reports on Monday said Li Auto wanted to lower the prices of Mega EVs to boost sales.

GM shares rose 0.8%, continuing their rally amid favorable EV mileage news.

Tesla rival admits a megafail

Xiang Li, CEO of Li Auto, said in the press release on Thursday: “First, we would like to acknowledge that Li Mega’s operating strategy was wrongly paced. We planned Li Mega’s operations as if the model was already in the 1-to-1 phase had entered the 10 scale phase, when in fact we were still in the nascent 0-to-1 business validation period.” He further added: “Next, we will first focus on our core user group and target cities with stronger purchasing power, recalibrating the Li Mega strategy to the 0-to-1 phase. After that, we will expand our reach to a broader user base and more cities.

“Second, we place an excessive amount of emphasis on sales volume and competition, which distracts us from what we excel at: creating value for our users and driving operational efficiency. We will lower our delivery expectations and restore sustainable growth by refocusing on increasing user value rather than competition. , while maintaining operational efficiency.”

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