After the class action lawsuit and layoffs, Li Auto's first-quarter financial report suffered another heavy setback. On May 20, Li Auto released its first quarter report for 2024. Although Li Auto's revenue in the first quarter still reached 25.6 billion yuan, a year-on-year increase of 36.4%, as the first new car-making force to achieve profitability, the word "loss" appeared again in its first-quarter financial report.
According to the financial report, Li Auto's operating loss in the first quarter was 585 million yuan. At the same time, Li Auto's net profit also fell sharply year-on-year, with a net profit of 591 million yuan, down 36.7% year-on-year. Judging from the financial report data, the main part of Li Auto's revenue is composed of vehicle sales revenue, and its operating loss and net profit decline are also related to Li Auto's unsatisfactory sales in the first quarter.
It is worth noting that in the earnings call of Li Auto, Li Xiang, the founder of Li Auto, said that Li Auto will not release pure electric SUV products this year, and will postpone the release to the first half of next year. Prior to this, Li Auto's first pure electric model, Ideal MEGA, was launched in early March, but this model did not become a "hot model" in the eyes of Li Auto, and even caused Li Xiang's "reflection".
After suffering a heavy setback in the first quarter earnings report, Li Auto seems to have become calm and realistic again.
The turmoil continued, and the first-quarter financial report made matters worse
After experiencing the highlight year of 2023, Li Auto seems to be in a "water reversal" period in 2024. Recently, Li Auto has suffered a class action lawsuit and layoffs.
Shortly before that, Lawson & Associates, a global investor rights law firm, announced that it had filed a class action lawsuit against Li Auto on behalf of the securities purchasers of Li Auto Co., Ltd. The cause of action is that investors allege that Li Auto exaggerated the market's demand for vehicles and the effectiveness of its operating strategy when it launched its first electric vehicle, the Ideal MEGA, and made false and misleading statements throughout the litigation period, causing the stock price to plummet.
After that, Li Auto was revealed to be carrying out a large-scale round of "personnel optimization". According to a number of media reports, the overall optimization ratio of Li Auto is more than 18%, and it is expected to involve more than 5,600 employees, of which more than 400 people will be optimized in the sales and service operation department, the recruitment department will be reduced from more than 200 people to 40 to 50 people, and the intelligent driving team will be reduced to less than 1,000 people.
The so-called house leak happened to rain overnight, and the release of the first quarter financial report once again gave Li Auto a "heavy blow". In the first quarter of this year, Li Auto delivered 80,400 vehicles, a year-on-year increase of 52.9%, but the sales volume of more than 130,000 units in the previous quarter declined. At the same time, a number of financial indicators of Li Auto have declined.
For example, total revenue decreased by 38.6% quarter-on-quarter from 41.7 billion yuan in the fourth quarter of 2023. Adjusted net profit decreased by 72.2% from approximately $4.6 billion in the fourth quarter of 2023. Of course, the most eye-catching are the two "positive to negative" data of Li Auto, including:
In the past four quarters, the operating profit has maintained a positive trend, even reaching 3.036 billion yuan in the fourth quarter of last year, and the free cash flow is negative 5.1 billion yuan, compared with 6.7 billion yuan in the first quarter of 2023 and 14.6 billion yuan in the fourth quarter of 2023.
Fortunately, Li Auto's gross profit margin is still at a high level in the industry, at 20.6% in the first quarter of this year, and as a reference, Leapmotor's gross profit margin in the first quarter of 2024 "turned from positive to negative", at -1.4%. During the same period, Tesla's gross margin was 17.4%. At the same time, Li Auto's cash reserves are still as high as 98.9 billion yuan.
The second quarter was sad, and the ideal MEGA hurt the ideal?
Looking forward to the second quarter, the financial report said that the quarterly delivery volume of Li Auto is expected to reach 105,000 to 110,000 vehicles, a year-on-year increase of 21.3% to 27.1%; Total revenue was $29.9 billion to $31.4 billion, up 4.2% to 9.4% year-on-year. Li Tie, CFO of Li Auto, even said that the second quarter will be the most difficult quarter for the company this year, considering the severe challenges we experienced in March.
In fact, when it comes to the "water reversal" of Li Auto this year, it is inseparable from the launch of Ideal MEGA. As the first pure electric high-end MPV model of Li Auto, Li MEGA debuted with the dream of "No. 1 sales of more than 500,000 units", but the car failed to achieve the effect expected by Li Xiang after its launch. Retail data shows that in March and April this year, the sales of the ideal MEGA were 3,229 and 1,145 units, respectively.
In addition, Ideal MEGA is the fuse that opens the "water reversal" period of Ideal Automobile. Li Xiang admitted in an internal open letter in March that there was a mistake in the business rhythm of pure electric products, and it affected the sales of L series products: the chaos of the rhythm of the ideal MEGA also allowed the sales team to greatly reduce the time and energy to serve L series users, and the main model of the ideal L8 did not even have a place in the store.
After that, Li Auto lowered its first-quarter delivery forecast, as well as a class action lawsuit and layoffs. At the first-quarter earnings call, Li Auto also seemed to be aware of some problems, saying that Li Auto will not release pure electric SUV products this year, and will postpone the release to the first half of next year. Li Xiang once reflected on the rhythm of the ideal MEGA, saying, "We mistakenly treat MEGA's operation from the 0 to 1 stage (commercial verification period) as the 1 to 10 stage (high-speed development period)."
The postponement of the release of the pure electric SUV may also mean that Li Auto's next focus is still on several range extender models of the L series. It is worth mentioning that on April 22, Li Auto announced that from that day, the 2024 Li L7, Li L8, Li L9 and Li MEGA will adopt a new price system. Among them, the price of Ideal MEGA is reduced by 30,000 yuan, the price of the 2024 Ideal L9 series, the 2024 L8/L7 model top Ultra, and the middle Max are reduced by 20,000 yuan, and the Pro version of the L8/L7 model is reduced by 18,000 yuan.
Of course, there is another way to postpone the release of pure electric SUVs, Li Xiang said that at this stage, the sales of high-end pure electric vehicles, self-operated supercharging piles are a necessary condition. The number of self-operated supercharging piles should reach a similar number to Tesla, which is the right time for the product to be introduced to the market. In addition, Ideal needs to upgrade and add more store booths to support more model sales.