Ideal suffered a "backlash", plummeting 89.7% month-on-month

Kanjian Finance

2024-05-21 09:15Published in Guangdong financial field creators

When Jia Yueting still wanted to be a "bridge between the Chinese and American automobile industries", domestic new energy vehicle companies had already begun to accelerate the elimination stage.

On May 20, Li Auto released its financial report for the first quarter of 2024, which showed that during the reporting period, Li Auto's total revenue was RMB 25.6 billion, a year-on-year increase of 36.4% and a decrease of 38.6% month-on-month; Net profit was RMB591 million, down 36.7% year-on-year and 89.7% quarter-on-quarter.

In fact, the decline in the performance of Li Auto is not unexpected, and the previous actions have been expressed.

Previously, it was reported by the media that Ideal is undergoing a new round of company-wide personnel optimization, and the overall optimization ratio exceeds 18%. According to the calculation of 31,600 people at the end of 2023, there are more than 5,600 optimization personnel this time.

As the leader of the new car-making forces, the results of Ideal in 2023 are obvious to all.

It is worth noting that Ideal is the first new car-making force to turn positive in annual profits.

The record of annual sales of 376,000 units and the net profit attributable to the parent company of more than 118.7 billion yuan gave Ideal the confidence to expand, so after September 2023, Ideal began its expansion plan. Along with the expansion plan, there is an annual target of 800,000 units sold in 2024.

Under this target, the staffing is expected to be 800,000 units. According to the financial report, the ideal headcount will increase by 63% year-on-year in 2023, becoming the fastest-expanding car company among the new car-making forces.

After entering 2024, Li Auto's sales volume did not show the target growth, and the pressure of sales swept Li Auto again. On April 22, under heavy pressure, Ideal announced a big price cut for the whole system, and this time the price reduction of the whole system is also the first time that Li Auto has made a public price reduction for the whole system.

It can be seen that the pressure on the ideal 2024 is huge. Of course, in addition to sales, the more serious problem is the problem caused by overcapacity, so Li Auto has a layoff action.

This problem has always been a common problem in the Internet industry, but I didn't expect that new energy vehicle companies have also begun to operate like this, which is not a good thing for manufacturing companies.

In fact, as early as late April, Kanjian Finance pointed out in the article "Tesla's "Problem", It's the Ideal's Turn" that the real pressure on Li Auto may not be the decline in sales, but the overcapacity that occurs after the decline in sales. Of course, this claim is not groundless.

According to previous reports by Chinese entrepreneurs, the ideal automobile manufacturing base in Wujin District, Changzhou City, Jiangsu Province, can build a car every 40 seconds on average, and 90 new cars can be rolled off the production line every hour, with a daily output of 1,800 vehicles. If calculated based on 1,800 vehicles and open every year, the production capacity of the manufacturing base can reach 657,000 units at full production in one year.

According to the ideal sales of 80,400 units in the first quarter, it is relatively difficult to break through 400,000 units as a whole throughout the year, so on the surface, the pressure of the ideal car comes from the sales side, but in fact the pressure comes from the production capacity side, after all, the production line is to be spent, if the overcapacity is obvious, the depreciation expense alone will produce a lot of losses every year, under the pressure of overcapacity, although the ideal car has achieved profitability, but the stability is still not guaranteed.

Of course, these are not the only problems that plague Li Auto. Recently, it was reported that Lawson Law Firm, a global investor rights law firm, recently announced that it would file a class action lawsuit on behalf of the securities purchasers of Li Auto Co., Ltd., and at the same time publicly solicit investors to participate in a free class action lawsuit.

According to the lawsuit, Li Auto's public statements were materially false and misleading at all relevant times, and the company and some of its executives made false statements during the litigation of this case, which violated securities laws and damaged investors. This includes the fact that when Li launched its first electric vehicle model, the MEGA, it exaggerated the market's demand for vehicles and the effectiveness of its operational strategy, and it is unlikely to meet its vehicle delivery expectations in the first quarter of 2024.

Li Tie, Chief Financial Officer of Li Auto, said: "Although the delivery volume in the first quarter fluctuated quarter-on-quarter, Li Auto is confident in the delivery growth in the next few quarters and remains invested in R&D and sales and service network. Looking ahead, we will continue to rigorously evaluate and optimize our operations, remain user- and product-centric, and move towards our long-term vision in a highly competitive market environment. ”

Kanjian Finance believes that despite the current ideal turmoil, but the core problem that really plagues the ideal is the balance between sales and production capacity, for new energy vehicle companies, although sales are very important, but in the current context of full competition, stable cash flow is the first.

At present, the domestic high-end car market has begun to become saturated, and the low-end new energy vehicle market space is still very large, so to win this market, you can lock in profits in advance, but in the low-end market, BYD has completely run out of the advantage, and wants to compete with BYD in sales, I am afraid the pressure will be greater. Therefore, in the face of the current market environment, car companies such as Ideal and Weilai should pay more attention to the safety of their own enterprises, and do not run blindfolded and put the company in a dangerous situation.

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