Hong Kong stock prices plunged 8.33%, and the market value decreased by 17.6 billion Hong Kong dollars (16.2 billion yuan). In the U.S. stock market, Ideal fell more than 8% in pre-market trading. As of 23:40 on April 22, its U.S. stock price fell 6.44% to $24.680 per share, reducing its market value by more than 14 billion yuan. On this day, the ideal market value lost about 30 billion yuan, and in Hong Kong stocks and U.S. stocks, the ideal market value has hit a low point in the past year.
Among them, the final closing price of Hong Kong stocks was HK$97.450, breaking through the HK$100 mark. This has led to a great shake in the market's confidence in ideal investment. This new force, which has been stable on the price side and announced that it will not fight a price war, is finally forced to reduce prices in exchange for the market.
On the morning of April 22, Li Auto announced that the 2024 Li L7, Li L8, Li L9 and Li MEGA will adopt a new price system. Among them, the price of the Ideal MEGA will be reduced by 30,000 yuan, and the current price will be 529,800 yuan, and the price of some models of the 2024 Ideal L9 and L8/L7 will be reduced by 18,000 yuan to 20,000 yuan. This is also the first time that Li Auto has officially announced a price cut. In addition, in order to avoid the impact on old car owners, owners of the above models who have already picked up their cars will receive cash feedback.
The 2024 model of the L series was officially launched on April 1 this year, and the current sales should also exceed 20,000 units. This means that Ideal may have paid 100 million yuan in compensation funds, which can be described as a large sum. But it is this kind of subsidy that makes the ideal gain rare praise while reducing the price. Because the day before, Tesla also announced a price cut, but there is no subsidy for car owners who have already picked up the car. This is also a rare ideal to "convince consumers". However, before the official announcement of the price reduction, Li Auto had repeatedly reduced the price in disguise through temporary subsidies, time-limited discounts and other measures.
At the end of 2023, Li Auto will launch local subsidies and terminal discounts, such as a local subsidy of 5,000 yuan per car in Beijing, which will reduce the transaction price of Li Auto by up to 30,000 yuan in some areas. In January 2024, Li Auto launched a limited-time discount for the 2023 L series models, with discounts ranging from 33,000 yuan to 36,000 yuan, and the price of the Ideal L7 dropped to less than 300,000 yuan. In order to avoid the impact on old car owners, the ideal price reduction message also blocks the old car in the APP. This has also sparked heated discussions before.
The ideal price reduction is caused by the current competition in the domestic new energy vehicle market. In terms of sales, in the first quarter of 2024, Li Auto's sales growth rate will decline compared with the same period in 2023. In the first quarter of 2024, Li Auto delivered a total of 80,400 new vehicles, a year-on-year increase of 52.9%, but its growth rate in the first quarter of 2023 was 65.8%. Judging from the weekly sales in April, the current ideal weekly sales are about 7,000 units, and the monthly sales are expected to be around 30,000 units, which is a big gap from the company's previous monthly sales of 50,000 units.
The sales volume was lower than expected, which also brought a large inventory to the ideal. Sang Zhiwei, an expert from the China Automobile Dealers Association, pointed out on April 11 that Li Auto added 20,000 new inventories in the first quarter, with a value of 6.2 billion yuan. Among them, L9 has the largest inventory, L9 is mainly affected by the M9, L7/L8 is affected by the M7, with an inventory of more than 10,000 units, and MEGA's first delivery month was dragged down by marketing events, with a new inventory of 2,100 units in the same month. In this context, "destocking" has become the most important task of Li Auto at present, and Li Auto needs to reduce production plans and increase retail market incentives to achieve a balance between supply and demand.
At present, Ideal has also lowered its sales target for the whole year of 2024. In 2024, Ideal will take advantage of the victory and set a performance target of 800,000 units. Among them, the sales target for the L7, L8, and L9 models is 400,000 units this year, and the MEGA electric MPV, which will be launched in March this year, will challenge the monthly sales target of 8,000 units, and the L6 that will be launched in April will challenge the monthly sales target of 30,000 units. However, the latest target has been adjusted from 650,000 to 800,000 units to 560,000 to 640,000 units, an overall reduction of 90,000 to 160,000 units.
From the point of view of time, the launch of MEGA is undoubtedly a turning point in the development of Ideal, and the failure of this product has triggered the stalling of Ideal's overall development. However, this is not a real crisis for ideals. The ideal L series is still able to maintain monthly sales at the level of more than 25,000 units, which is in the first echelon of new forces, and only Huawei can fight with it. Weilai, Xpeng, etc., have monthly sales of about 10,000 units.
On April 18, Ideal's other blockbuster model this year, the L6, was launched. The L6 has launched two configuration models, Pro and Max, with a price of 249,800-279,800, and is currently being delivered in small batches and in large quantities in May. The appearance is similar to that of the L7, and the power system is equipped with a 1.5T engine + front and rear dual motors, which accelerates from zero to 100 in 5.4 seconds and has a range of 1390 kilometers under comprehensive working conditions. The ideal L6 exceeded 10,000 orders within 72 hours. This order volume brings a bit of a boost to Ideal's current sluggish morale, but it is not good enough compared to the performance of other products. After all, according to official data, MEGA received 10,000 orders within 2 hours of its launch.
However, it should be emphasized that after this price reduction, Ideal also faces internal competition between L6 and L7\L8. After the price reduction, the ideal L7 Pro is sold for 301,800 yuan, the ideal L7 Max is sold for 329,800 yuan, and the ideal L7 Ultra is sold for 359,800 yuan. The ideal L8 Pro costs 321,800 yuan, the ideal L8 Max costs 349,900 yuan, and the ideal L8 Ultra costs 379,800 yuan. As for MEGA, the price reduction of 30,000 yuan this time may have a very limited effect on the final promotion of the market. In fact, the psychological expectation of the outside world for the MEGA was about 450,000 yuan, and the final price of the car was much higher.
The price cut is also expected to have an impact on the desired gross profit performance. Ideal's full-year net profit in 2023 will be 11.81 billion yuan, while in 2022, the company's full-year net loss will be 2.032 billion yuan. In 2023, Ideal will sell 376,000 vehicles for the whole year, a year-on-year increase of 182.2%. If the average bicycle is calculated at 15,000 yuan, the ideal monthly (30,000 yuan) in revenue will lose 450 million yuan, and the annual loss will be between 5 billion ~ 6 billion yuan, and the impact on its revenue and gross profit will not be great. In addition, given the distribution of model sales, the ideal gross margin may simply decline.
However, for consumers, the disadvantages of price reduction are also obvious, which can easily cause consumers to worry about the value of the model. In fact, Xpeng, NIO, Tesla, etc. have all experienced official price cuts before. But from the perspective of effect, it can stimulate sales in the short term, and the final improvement effect will not last long.
Taking Xpeng Motors as an example, the company just announced a new price reduction strategy on April 20, and from now until May 5, 2024, it will launch a limited-time car purchase subsidy of 500 million yuan, covering a total of four models of Xpeng G9, G6, P7i, and 2024 Xpeng P5. Previously, on March 3, Xpeng Motors announced that before March 31, 2024, all Xpeng G6 models will be reduced by 20,000 yuan for a limited time, and the price will start at 189,900 yuan after the discount. But on the other hand, Xiaopeng's sales did not have an immediate effect. From April 8 to 14, Xpeng sold 1,624 units, nearly 800 units behind Xiaomi. This means that Xpeng's price reduction measures after the launch of the SU7 have had limited effect.
The competition that Ideal faces in 2024 will continue to increase. In addition to the continuous offensive of Huawei's products, related products of independent brand groups are also entering. For example, the Xingtu Star Era ET, which competes with the L6, has a starting price of less than 200,000 yuan as a medium and large SUV. There are ideals, Star Era ET basically has them, and in addition, it has greatly surpassed ideals in many technologies. This kind of market-grabbing posture is already very obvious.
According to incomplete statistics, since April, more than 38 car companies, a total of 126 car series, have carried out price reductions or preferential adjustments, including 84 traditional fuel models and 42 new energy models. This is the first time in the history of the automotive market that such a large price reduction has occurred. And once the ideal starts the official price reduction, it also means that the moat it established before has disappeared. 2023 may be the best year for the ideal, and its challenges are just beginning now.