Li Auto remains a rare profitable EV maker despite setbacks

On Wednesday, prominent electric vehicle player Li Auto (NASDAQ: LI ) issued a better-than-expected second-quarter report. However, even as Tesla Inc’s (NASDAQ: TSLA ) price war has been eating into margins for some time, Li Auto and BYD (OTC: BYDDY ) remain China’s only profitable electric vehicle makers. Li Auto also regained its lead in China’s new energy SUV sales, surpassing Tesla in July in terms of unit sales.

Despite the reduced margins, Li Auto and BYD are still profitable.

BYD, the world’s largest electric vehicle maker, reported earnings of 9.1 billion yuan, or about $1.28 billion, for the second quarter that ended in June. In other words, BYD reported that its revenue nearly doubled from the previous fiscal first quarter and rose 32.8% from the comparable quarter last year, while delivering a record 986,720 pure electric cars and plug-in hybrids around the globe.

Li Auto highlights from the second quarter

For the quarter ended June 30, Li Auto reported that vehicle deliveries rose 25.5 percent from last year.

Net income saw a significant year-on-year decline of 52.3% as it halved to 1.10 billion yuan, which is about $154.4 million. Sales, on the other hand, rose only about 10% from last year to about $4.4 billion, but still beat the Wall Street estimate of $4.31 billion. But operating expenses rose 23.9% from a year ago and gross margin fell to 19.5%, down from 21.8% reported in the comparable quarter last year.

Solid guidance despite a constantly challenging EV environment.

For the third quarter, Li Auto guided deliveries in the range of 45,000 to 155,000 vehicles, which would represent a year-over-year increase of 38.0% to 47.5%, with sales of $5.4 billion to $5.8 billion , representing an annual increase from 13.7% to 21.6% %.

Despite intense competition from BYD, Tesla and others, Li Auto turned the setbacks into a comeback.

Li Auto’s second-quarter earnings call painted a picture of a company that is not only successfully navigating the competitive EV market, with BYD’s dominance affecting smaller EV rivals, but also making strategic moves to ensure continued growth as well as leadership. when it comes to the high-end NEV market. Therefore, Li Auto has done more than prove its mettle by standing proudly alongside BYD and Tesla. Second-quarter profit fell amid slower sales growth and tight margins, but Li Auto remains among the few profitable electric vehicle makers.

DISCLAIMER: This content is for informational purposes only. It is not intended as investment advice.

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