The Rise of Li Auto: New Model Orders Surge, Challenging Tesla in the EV Market

Key Takeaways

• Li Auto ADRs jumped in premarket trading Monday as the electric vehicle (EV) maker said orders for its newest model had passed 41,000 vehicles.
• Last week, Li Auto reported overall April delivery numbers of 25,787, nearly the same as the figure the company reported in April 2023.
• Li Auto is one of the homegrown Chinese companies making the EV market more competitive for Tesla and others.

American depositary receipts (ADRs) of Li Auto (LI) surged in premarket trading Monday as the electric vehicle (EV) maker provided an encouraging update on orders for its newest model. Last week, Li Auto reported overall April delivery numbers of 25,787, nearly the same as the figure the company reported in April 2023.

New L6 Model Seeing Solid Demand

On April 18, the company announced the Li L6, an electric SUV that was also its first model priced below 300,000 Chinese yuan ($41,626.50). The company said last week that it plans to commence “large-scale deliveries” of the new model in May.

Li Auto reportedly said last week on Chinese social media network Weibo that orders for the L6 had surpassed 30,000, and said in a follow-up post Monday that orders were over 41,000, according to multiple reports.

Chief Executive Officer (CEO) Li Xiang said the new model has seen “widespread popularity among young families” since its launch last month.

Slowing Demand, Increased Competition Helping Li Auto, Others Squeeze Tesla’s Market Share

Demand for electric vehicles seemed to have lagged in recent months in China, with Li Auto cutting its sales forecast and Tesla reportedly scaling back production at its Shanghai facility in March.

Another factor that could have limited sales is the increased competition in the EV market, as several homegrown Chinese companies have squeezed Tesla’s market share in the country, along with XPeng, Nio, and BYD.

ADRs of Li Auto, which is expected to report first-quarter earnings later this week, rose about 7% to $29.98 an hour before the opening bell Monday. They closed Friday down 3.4% to $28.

In conclusion, Li Auto’s impressive surge in new model orders highlights the growing competition in the electric vehicle market, particularly in China. With the introduction of the Li L6 and its strong demand among consumers, Li Auto is positioning itself as a key player challenging Tesla’s dominance in the industry. As the EV market continues to evolve and expand, it will be interesting to see how companies like Li Auto navigate this competitive landscape and drive innovation in sustainable transportation.