Chinese electric vehicle startup Li Auto saw its losses widen in the second quarter of the year, according to its periodic fiscal disclosure on August 15, which also provided soft guidance for the third quarter.
The lackluster figures seem to have added woes to the EV maker’s prospects in the wake of successive high-profile car accidents.
In the second quarter, Li Auto recorded 8.73 billion yuan ($1.30 billion) in revenue, an increase of 73.3% from the year before. The revenue gain decelerated from a surge of 167.5% during the first quarter. Furthermore, the EV maker saw its revenue shrink by 8.7% from the first quarter.
In terms of earnings, Li Auto booked 641 million yuan in net losses suring the second quarter, compared with net losses of 235.5 million yuan during the same period last year. The second quarter number also worsened apparently from 10.9 million yuan in net losses logged in the first quarter.
It is worth noting that Li Auto tallied 183.4 million yuan in non-GAPP net losses in the second quarter, ending a growth streak for the third consecutive quarter in non-GAPP terms.
More specifically, the automaker’s operating expenses – research and development spending, and selling, general and administrative expenditures – recorded an uptrend in the second quarter, while its loss from operations soared 82.6% year-on-year to 978.5 million yuan in the second quarter, or skyrocketed 136.9% on a quarterly basis.
The announcement prior to the US opening bell turned out to be an instant damper on Li Auto‘s shares on the Nasdaq. Its stock opened more than 5% lower and swiftly sank further before swinging back into positive territory.
The EV maker’s hefty losses during the past quarter were understandably in part attributed to the Omicron flare-ups in Shanghai over April that had dealt a blow to the country’s entire auto sector.
With manufacturing facilities in Changzhou, East China’s Jiangsu Province and more than 80% of its auto part suppliers located in the Yangtze River Delta region, Li Auto only delivered some 4,100 vehicles in April. Along with a resumption of production and work in the region throughout May and June, the EV maker embraced a delivery rebound. Nonetheless, its deliveries still fell in the second quarter for two quarters in a row.
Instead of expecting an upsurge in the third quarter, Li Auto on August 15 revealed a rather banal guidance. The company put its vehicle deliveries at between 27,000 and 29,000 for the third quarter, a rise of 7.5-15.5% on a yearly basis.
Its total revenue was estimated to range between 8.96 billion yuan and 9.56 billion yuan for the third quarter, a gain of 15.3% to 22.9% from the year before.
The availability of the overall unimpressive numbers came on the back of several recent accidents that implicate the EV maker, fanning doubts over the viability of one of the country’s new automotive forces.
On August 8, a Li ONE model in assisted driving mode reportedly bumped into an engineering vehicle parked on the roadside. The accident came a few days after a Li ONE fire accident on the Chengdu-Chongqing highway in Southwest China’s Sichuan Province, which left the vehicle burned to the ground.
The EV maker ruled out any issue with vehicle quality in the case of the fire accident on August 1 and accused the driver of taking their hands off the wheel when the car hit against the engineering vehicle. Besides, the accident went beyond the normal job of the 2021 Li ONE’s advanced driver-assistance systems (ADAS), according to Li Auto.
That said, the newly unveiled Li L9 was a major bright spot of the latest quarterly disclosure. The new model, officially introduced on June 21, is a six-seat and full-size flagship SUV that adds to Li Auto‘s fleet, which previously only comprised the Li ONE.
Coming at a retail price tag of nearly 460,000 yuan – over 100,000 yuan more expensive than the Li ONE – the L9 has arguably been designed to gear up Li Auto for a foothold in the more upscale segment of the EV arena.
In the words of Li Auto founder and chairman Li Xiang, “our second model, Li L9, a flagship smart SUV for families, has received positive feedback from our users since its launch on June 21, as evidenced by the especially strong number of non-refundable orders received for the vehicle.”
“The great perception and vehicle control capabilities of our self-developed autonomous driving system, Li AD Max, the excellent drivability empowered by our flagship range extension system, and the all new entertainment experience featured in Li L9’s innovative, interactive space, have all garnered highly positive reviews from users in test drives,” reads a statement on the company’s website that announced the second quarterly results, citing Li.
Nevertheless, it remains elusive as to whether the higher-end second model could truly become a hit amid an overall economic downturn.
Factoring in a flurry of EV accidents in recent months that have spotlighted not only Li Auto but the other two new Chinese automotive new forces – NIO and XPeng – even the most EV-aspiring users tend to think twice about opting for an electric car. For Li Auto, which is now shown to be shifting into lower gear, it might suggest an even bumpier ride ahead.