Chinese EV Maker Li Auto Surges on Q1 Earnings

Electric vehicle (EV) stocks have been especially volatile in recent months, but investor sentiment seems to be improving following solid earnings reports from some prominent EV companies.

China’s Li Auto (NASDAQ: LI) reported first-quarter results on Wednesday, and the stock has surged despite modestly missing Wall Street’s forecast for the bottom line.

As of 12:50 p.m. EST, shares were up 13%.

How Li Auto fared in Q1

Total revenue in the first quarter was $545.7 million, beating the consensus estimate of $522.5 million in sales. That resulted in an adjusted net loss per American Depository Share (ADS) of $0.03, slightly worse than the $0.02 per ADS in adjusted losses that analysts were expecting.

Vehicle deliveries, which Li Auto had previously announced, were 12,579 in the first quarter. As of the end of April, the company had 73 retail stores and 143 service centers. Li Auto currently only makes one vehicle, the Li Xiang One SUV (the Li One). 

Yesterday, Li Auto unveiled a new 2021 model of the Li One that features more range (up to 1,080 kilometers) and includes more active safety features as well as an improved advanced driver-assistance system (ADAS) with Level 2 semi-autonomous functionality. The 2021 Li ONE also has more legroom in the third row.

The company finished the quarter with $4.6 billion in cash on its balance sheet, and then proceeded to raise an additional $862.5 million in cash in April by issuing convertible senior notes that come due in 2028. Li Auto plans to use that money to help fund R&D as well as other general corporate purposes like working capital.

Slowly overcoming the chip shortage

On the conference call with analysts, exec Kevin Shen acknowledged that Li Auto is suffering from chip shortages that are creating a component bottleneck, similar to peer EV companies in China. Production capacity at Li Auto’s factory in Changzhou is currently 500 units per day, but the current supply chain challenges are preventing the company from achieving that manufacturing volume.

Conditions should improve in the months ahead though, and Shen expects monthly production to increase to 10,000 by September. That monthly production rate is meaningfully higher than the 5,539 vehicles that Li Auto delivered in April.

Looking ahead

Guidance for the second quarter calls for revenue in the range of $609 million to $651.7 million, which is shy of the $704.5 million in sales that Wall Street is currently looking for. Vehicle deliveries are forecast to be between 14,500 to 15,500.

While the outlook was a little lacking, investors seem to be impressed with the 2021 Li One as well as the upcoming production ramp later this year. Management is confident that the refreshed model will bolster demand.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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