The Downfall of Li Auto Inc
Investors were taken aback as Li Auto Inc (NASDAQ: LI) announced a significant downward revision in its first-quarter FY24 vehicle deliveries projection. The company now anticipates delivering between 76,000-78,000 vehicles, down from the initial forecast of 100,000-103,000. This abrupt shift is attributed to a sluggish order intake rate that fell below expectations.
CEO Insights
Xiang Li, chairman and CEO of the company, disclosed, “We planned operations of Li MEGA under the assumption that the model had already reached the scaling phase of 1-to-10. However, in reality, we were still in the nascent stages of the 0-to-1 business validation period. Similar to our previous models like Li ONE and EREV technologies, Li MEGA and our BEV technologies require validation through this 0-to-1 process.”
Strategic Realignment
Li further outlined, “Moving forward, our primary focus will center on our core user base and cities with robust purchasing power. We will recalibrate our Li MEGA strategy, reverting it to the 0-to-1 phase initially. Subsequently, we aim to expand our reach to a broader consumer demographic and additional cities.”
Path to Recovery
The CEO emphasized the company’s commitment to restoring sustainable growth by concentrating on enhancing user value rather than engaging in cut-throat competition. Operating efficiency remains a central tenet of this strategic shift.
Market Reaction
In response to this announcement, LI shares plummeted by 7.31% to $31.59 in pre-market trading, underscoring investors’ concerns about the company’s revised delivery projections.
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