Sales crown + layoffs + stock price plummeting, Li Auto has fallen into a new crisis, L6 may become the final peak?

Kung Fu shooting

2024-05-24 11:24Posted in Guangdong automotive creators

Li Auto's share price continues to fall.

On May 22, Li Auto's stock price has fallen to $20.77, and the total market value has also come to $22.037 billion, which has fallen by more than half compared with the peak stock price.

The most outrageous thing is that Ideal also announced the weekly sales ranking on May 21, surpassing Wenjie to win the sales championship in the 20th week of 2024. In parallel with the sales fire and the collapse of the stock price, there is also the news that the ideal multi-department has begun to lay off employees, with a total of more than 5,600 "optimized" employees.

Booming sales, plummeting stock prices, and layoffs seem to be the "impossible triangle" of the automotive industry. Why does it happen to Li Auto? Let Kung Fu Motors take you to take a look.

(1) It seems that sales are booming, but in fact, the picture is poor?

Judging from the sales volume alone, the ideal did perform well, selling nearly 8,000 new cars in the third week of May, still maintaining a scale of about 40,000 in a single month, ranking among the best among the new forces.

But after careful analysis, we know that this achievement of Li Auto is actually quite large.

In 2023, Ideal sold 376,000 new cars, and even achieved a monthly sales volume of more than 50,000, which can be described as a strong momentum. Ideal also set a target of selling 800,000 units in 2024, and began to recruit people and expand channels on the premise of this goal.

However, people are not as good as heaven, and the flagship MPV MEGA, where the ideal has high hopes, is completely unaccepted by the market. In March, there were 3,229 vehicles, and in April, there were only 671 left, and in the next May, there is a high probability that there will be another round of decline, and then it will be directly and slowly stopped.

It is not surprising that such a thing happened, and there were also such "unfavorable" models in the era of fuel vehicles. A more typical example is Volkswagen's Phaeton, which was also very popular at the time, but in the end there were few sales. But a car like Phaeton is used to enhance the brand image, but MEGA is carrying the KPI of ideal sales, and it was intended to contribute about 100,000 sales a year, but now it has fallen directly to passers-by, which is a great blow to the ideal.

In this case, the ideal can only be exhausted, and the hope is pinned on the ideal L6. The entry-level model is also really competitive, with the 10,000th production car officially rolling off the assembly line in just one month after its launch, and the company plans to increase production capacity to 20,000 units in June.

The problem is that the ideal L6 comes out, in fact, it is more of a market to grab the ideal L7. After all, the appearance, size, and configuration of the two are similar, but the guide price is 70,000 yuan, and many L7 target users have switched to L6. There is no better way for Ideal, from 21 Ideal ONE to 20 Ideal ONE, then to L series, and then to L9, L8, L7, L6 in order, Ideal has been relying on "backstabbing" to maintain its popularity.

The price is that the price of the car is getting cheaper and cheaper, and when the flagship model MEGA completely fails, there are not many cards that the ideal can play. After all, there is another L5, but it will meet BYD in a narrow way, and there is a high probability that there will be Xiaomi's next SUV, and it is difficult to break the ideal.

This is also the reason why the ideal stock price has plummeted, and the entire product definition has been exhausted.

(2) The failure of pure electric power has a far-reaching impact?

The greater impact of MEGA's failure may still be at the level of technical routes, announcing that the ideal cannot go through the pure electric route. Originally, in the definition of ideal, once MEGA succeeds, it will launch several pure electric SUVs such as Ideal M7/M8/M9 to expand new tracks. In this situation, the ideal pure electric technology route has been postponed again.

Ideal success is closely related to taking the extended range route. At that time, the ideal ONE was born, which did have a great impact on the medium and large SUV market. After all, in the past, the price of 300,000 was only available for joint venture fuel vehicles, but now the ideal refrigerator, color TV, and large sofa are coming, attracting many users.

But now the range-extending route has long been overcrowded, not to mention the huge impact on the ideal of the latecomer in the world, Nezha, Zero, Deep Blue, these new forces have embarked on the range-extending track. The ideal has always been stable and good, after all, there is a first-mover advantage. Once there is a positioning mistake like MEGA again in its own range extension products, it is likely to be a catastrophe.

Then there is the issue of profits, and stronger competition means smaller profits. Ideal's net profit in the first quarter was 591 million yuan, down 36.7% year-on-year and nearly 90% quarter-on-quarter. It can be said that it has been booming for half a year, and it is close to zero. The reason is also very simple, in order to maintain sales, Ideal has been desperately reducing prices, and profits are naturally low.

In contrast, the pure electric track is still more profitable, but now this road has been blocked. The ideal is also gambling, maintaining high sales by constantly exploring and reducing prices, and other new forces can't hold on. If this goal is not achieved, the ideal may collapse in advance.

This is also the key to the big layoffs of the ideal although it seems to be selling well. Because it is limited to the category of extended-range SUV, there is very little R&D work that can be done ideally, so what to do with so many R&D personnel? It's better to adjust in advance for the winter.

But capital is never stupid, and such superficial prosperity naturally cannot be hidden, which is also the key to the ideal realization of the "impossible triangle".

(2) Is the moat too shallow the key?

Many people don't understand, isn't the ideal sales always high? And even if it is down, the price of the car is higher than that of most car companies, why is it suddenly not working? One of the key issues involved is the moat. To put it bluntly, making money is not a problem, what to make money on is the key.

A while ago, the ideal battery issue caused a lot of controversy, and the key point is the mixing of Sunwoda and CATL batteries. In the end, the ideal had to reduce the price and calm the people, otherwise it would be difficult for the ideal to cross the threshold of public opinion at that time. But the result is that the ideal new declared model chose to use the whole series of Sunwoda batteries, and chose to work against consumers, the reason is that the cost is unbearable.

Although Sunwoda is cheaper than CATL, it is also profitable, which also means that Ideal may have to seek suppliers with lower prices in the future. Without R&D strength, it means that it is difficult to have bargaining power.

Car companies with strong self-research capabilities will not have this problem. The most typical is BYD, Qin PLUS, a 100,000-level car, which can be reduced from 110,000 to 998 and then to 798, relying on the advantages of the whole industry chain. BYD can take out the profits of the battery, the motor can also make money, the chip can also make money, and the moat is indeed much deeper than the ideal.

To put it bluntly, what the ideal can do, other car companies can also do. BYD can reduce costs by optimizing core components, and ideally can only change suppliers. Switching from the first line to the second line, and from the second line to the third line, but at the cost that word of mouth may be all the way downhill. It's not obvious yet, but it's hard to say what the future holds.

(4) Kung Fu shooting

I have to say that Ideal is a smart company, including layoffs when the wind is not in the right direction, and immediately adjust the course when MEGA is not in good shape. This flexible and mobile way does avoid the ideal jumping into the big pit, otherwise the second half of the year will launch several pure electric SUVs, and the ideal may collapse directly.

However, building a car is not something that can be done by being smart, and the final comparison is still the core competitiveness. BYD's entire industry chain and Huawei's intelligent driving are all hurdles that cannot be bypassed. And Chery, Geely, and the Great Wall, which have come back to their senses, how long will they have a respite for ideals?

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