In the first two weeks of July, more than 200 Li Auto vehicles were privately exported to destinations dominated by Central Asia and the Middle East, its CEO said.
(Image from Li Auto CEO Li Xiang's Weibo.)
Li Auto (NASDAQ: LI) will continue to steer clear of overseas markets for the next year or two, although it has seen some demand for its vehicles overseas.
In the first two weeks of July, more than 200 Li Auto vehicles were exported by private individuals, the company's founder, chairman, and CEO Li Xiang said late last night on Weibo.
Li Auto found after a detailed investigation that Central Asia and the Middle East were the main destinations for these vehicles being exported, he said.
"Previously it was parallel imports (that were popular in China), now it's popular to parallel export," he said.
Nonetheless, Li Auto will not enter overseas markets before and will focus all its resources on achieving the target, he said.
In overseas markets, Li Auto will maintain its direct sales model, he added.
Li Auto's goal is to reach annual sales of 1.6 million vehicles by and annual revenue of 500 billion yuan ($70 billion), Li wrote on June 21 on Weibo.
Unlike Li Auto, Nio (NYSE: NIO) entered the European market in , where it has opened several directly operated stores and launched multiple models.
Xpeng (NYSE: XPEV) has also entered Europe and announced earlier this month that it is partnering with a local dealer to expand into Israel.
The Li Auto CEO provided an image in yesterday's Weibo post showing the company's five-seat SUV, the Li L7, priced at 31,800,000 tenge ($71,630) in Kazakhstan.
The Li L7 is Li Auto's least expensive model, starting at RMB 319,000 ($44,430) in China.
All of Li Auto's models are extended-range electric vehicles (EREVs), with the other two -- the Li L8 and Li L9 -- currently starting at RMB 339,800 and RMB 459,800 respectively in China.
In the comments section of Li's Weibo, some users shared images showing the Li L9 also appearing in Kazakhstan and Russia.
($1 = 443. Kazakhstani tenge, $1 = RMB 7.)
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On the evening of February 26, Li Xiang, CEO of Ideal Auto (, LI.US), said in an earnings conference call that Ideal Auto &#;has no plans to launch models under 200,000 yuan within five years.&#;
On the evening of February 26, Li Xiang, CEO of Ideal Auto (, LI.US), said in an earnings conference call that Ideal Auto &#;has no plans to launch models under 200,000 yuan within five years.&#;
According to the Zhitong Finance App, since last year, there has been a continuous blowout of new products in the domestic NEV market, and the price war has begun in full swing. The price of many medium and large electric models has been lowered to less than 200,000 yuan. The war situation can be described as quite severe.
In the current market environment where penetration rates and price wars are the main focus, the reason why Li Xiang dares to &#;brag about Haikou&#; shows that management believes that the ideal car has already gone through the middle and high-end domestic NEV routes, and the newly disclosed annual report is proof.
Capturing 100 billion dollars in revenue in the traditional BBA market
Financial reports show that in , the annual delivery volume of the three L series models of Ideal Auto increased by 182.2% year-on-year to 376,000 units. The increase in vehicle deliveries has led to a rapid increase in the company's vehicle sales revenue.
In the fourth quarter of last year, many of Ideal Auto's financial indicators hit record highs. During the reporting period, the company's revenue increased by 136.4% year on year to 41.73 billion yuan, and annual revenue increased 173.5% year on year to 123.85 billion yuan. At the same time, the company's gross margin reached 23.5%.
In , the company obtained vehicle sales revenue of 120,095 billion yuan (RMB, same below), a year-on-year increase of 172.7%; gross vehicle profit margin of 21.5%, an increase of 2.4 percentage points; total revenue of 123.851 billion yuan, an increase of 173.5%; gross profit of 27.497 billion yuan, an increase of 212.8%; and net profit of 11.809 billion yuan, turning a year-on-year loss into a profit.
Taking the domestic car companies' financial data as an example, there are only six domestically listed automakers with annual revenue exceeding 100 billion dollars, namely SAIC Motor Group, BYD, Geely Automobile, Great Wall Motor, Changan Automobile, and Guangzhou Automobile Group. Among them, the only companies with net profits exceeding 10 billion dollars are SAIC Motor Group and BYD. In other words, in , Ideal Auto became the third domestic car company with net profit exceeding 10 billion dollars.
It is worth mentioning that the ideal way to obtain 100 billion dollars in revenue and 10 billion dollars in profit depends not on &#;volume,&#; but on the average transaction price of 370,000 yuan. This price has clearly penetrated into the price center of traditional middle and high-end fuel vehicles represented by BBA.
Currently, the price of all three products launched by Ideal Auto is over 300,000 yuan, and they are extended-range hybrid products, including the full-size Ideal L9 in the price range of 400,000 to 500,000 yuan, and the Ideal L8 and Ideal L7 in the price range of 300,000 to 400,000 yuan. According to the plan, in the second quarter of this year, Ideal will launch the L6, the fourth product in the L series. The car is a mid-size SUV with a price range of 200,000 yuan to 300,000 yuan. It is currently the lowest-priced product in the L series. Competitors include Model Y, BMW iX3, X3, Mercedes-Benz GLC, and Audi Q5.
Taking the BBA's sales results may reflect the highlights of Ideal Auto in . According to the Zhitong Finance App, in , Mercedes-Benz, BMW, and Audi delivered 765,000 vehicles, 825,000 vehicles, and 729,000 vehicles respectively domestically. The overall sales volume of the three BBA companies rebounded compared to the same period in .
However, judging from vehicle sales prices, from to , the average transaction price of the three BBA vehicles dropped three times in a row. Take the fuel vehicle BMW 3 Series as an example. In , the transaction price of the 3 Series was concentrated at 30-350,000, and this price brought sales as high as 151,000 units. However, in , the BMW 3 Series sold only 15,000 units in this price range, moving down the sales volume of about 132,000 units to the 25-300,000 yuan range. In the new energy sector where the BBA is weak, the official guide price for the BMW i3 is 35-410,000 yuan, yet the price of a bare car in Shanghai is only 24-280,000 yuan, which is not as good as an ideal L8 model at the same price.
Although the impact of ideals on the BBA market was far less shocking to consumers than the &#;798 Qin Wang Suge&#; campaign launched by BYD to integrate the supply chain for domestic joint venture brands, the secondary market is still quite appreciative of the ideal middle and high-end route based on performance verification.
The Zhitong Finance App observed that after the disclosure of the annual report results, Ideal Auto's US stock price closed up 18.79% to 41.34 US dollars on February 26, a record high since this year. On February 27, Ideal Auto's Hong Kong stock relay surged. After opening, the company's stock price soared. At one point, the highest increase reached 25.45%, and the stock price also stood at HK$175, which is close to the previously set high level of stock price since listing.
Li Xiang, Chairman and CEO of Ideal Auto, said, &#;In , when competition is fierce in the NEV market, Ideal Auto achieved excellent results with the three L series models. The annual delivery volume increased by 182.2% year-on-year to 376,000 units, making it the sales leader for NEVs over 300,000 yuan in the Chinese market.&#;
For the first quarter of , Ideal Auto expects revenue to be between 31.25 billion yuan and 32.19 billion yuan, up 66.3% to 71.3% year on year; delivery volume is 100,000 to 103,000 vehicles, up 90.2% to 95.9% year on year.
When will it reach the global market?
In fact, 100 billion dollars in net profit of 10 billion dollars is just the beginning for Ideal Auto. If we want to become an automobile giant, it is essential to go overseas and be recognized by the global market in the future.
In , China's vehicle exports surpassed Japan for the first time and became number one in the world. According to data released by the China Association of Automobile Manufacturers, China's automobile exports in are close to 5 million vehicles. Among them, exports of new energy vehicles exceeded 1.2 million units, an increase of more than 77% over the previous year.
However, on the B-side of this happy news, the Toyota Group, which is the trump card of Japanese automobiles, will continue to surpass the Volkswagen Group in with global vehicle sales of 11.23,000 vehicles, making it the largest automobile manufacturer in the world. According to the financial report for the first half of fiscal year (April to September ) previously announced by Toyota Motor Corporation, its revenue was 21.98 trillion yen and net profit was 2.59 trillion yen, a sharp increase of 121.1% over the previous year, equivalent to RMB 129.65 billion.
Referring to Toyota's history and judging from the current volume and &#;internal trends&#; of the domestic automobile industry, going overseas is almost a necessary path for NEV companies to grow bigger and stronger.
In terms of market penetration rate, according to Marklines data, in October , the penetration rates of new energy vehicles in Germany, France, the United Kingdom, and the United States were 24.7%, 22.5%, 21.7%, and 9.7% respectively, far lower than at home. However, driven by European and American countries' long-term plans to reach carbon peaks and carbon neutrality, the ban on the sale of fuel vehicles is an inevitable trend, so there is plenty of room for development in the overseas NEV market.
According to previous European car market research, in the first 11 months of , pure electric models accounted for 16.3% of new car sales in Europe, surpassing diesel models. Coupled with the 8.1% market share of plug-in hybrid models, Europe's current NEV market share is close to 1/4.
From the perspective of market competition, according to Cleantechnica data, in November and January-November , the top 2 NEV sales in Europe were Tesla Model Y and Model 3. Among them, the total market share of the two was 13.0% in November and 11.7% in the previous November, which had an absolute advantage over other models. As can be seen, the European and American markets lack strong competitors other than Tesla. The best-selling models are concentrated at over 250,000 yuan, and the competitive environment is relatively clear.
However, in July of last year, Li Xiang, CEO of Ideal Auto, posted a post on Weibo saying, &#;Ideal Auto will not be an overseas market until , and will concentrate all resources to achieve the goals.&#; But at the same time, Li Xiang also said, &#;In the first two weeks of July, private exports of more than 200 cars were carried out in parallel. After detailed investigation, it was discovered that they were mainly exported to Central Asia and the Middle East.&#; Recently, the market also reported that Ideal Auto will explore its way in the Middle East and North Africa market in .
In fact, it's not surprising if the ideal is to go overseas early; after all, domestic automobile exports have accelerated markedly since . Meanwhile, in the context of gradual internal expansion, overseas markets have also become a new lifesaver for Chinese brand cars. Ideally, compared with many traditional domestic car companies, Ideal Auto's biggest advantage is that it can accurately understand the car needs of domestic consumers. However, in the future, in overseas markets, it is still unknown whether it can ideally rely on extended-range hybrid technology and configuration advantages to win over overseas consumers.
For more information, please visit Li Auto L9 exporter.