Li Auto prepares to debut its first all-electric vehicle. Li Auto stock broke out Tuesday as investors cheered improving margins and solid delivery outlook, with new EVs due.
On Monday, Li Auto delivered strong earnings and delivery guidance. It also reported that gross margins and vehicles margins expanded in Q4, amid a Tesla-led price war in China last year.
Gross margin reached 23.5% in Q4 of 2023, vs. 20.2% in Q4 2022 and 22% in Q3 2023, Li Auto said.
Investors watched Tesla's margins in 2023 after a series of price cuts in the Chinese and U.S. markets.
On Friday, Li Auto will launch the Mega MPV, or minivan, its first fully battery-electric vehicle.
At the same time, Li will unveil the 2024 versions of its L7, L8 and L9 hybrid SUVs. The L7 SUV is widely seen as a Model Y rival.
The Chinese EV startup plans to launch three more all-electric models in the second half of 2024.
Li Auto Stock
Shares rocketed nearly 12% to 46.21 in big volume on the stock market today. Li Auto stock seized a 42.35 buy point from a 44%-deep double-bottom base.
The China EV stock has rebounded strongly since hitting a seven-month low of 26.43 on Jan. 22. LI stock is now nearing its record high from November 2020.
Tesla stock edged up a fraction Tuesday, under a falling 50-day moving average.
'Resilient' EV Margins Amid Price War
Li Auto earnings on Monday cemented its position as a top-tier China EV maker, Deutsche Bank analyst Edison Yu said in a note to clients Tuesday.
"While recent volumes have dipped, the trajectory for March and beyond looks very robust," Yu said.
"Perhaps even more impressive, the gross margin is proving much more resilient than feared despite the ongoing price war," the analyst added. He tied the resilience to cost savings.
Yu rates Li Auto stock a buy. He hiked the price target from $41 to $50.
Analysts at Bank of America, Barclays and Jefferies have also recently raised their price targets on LI stock, according to TheFly.com. Those firms noted Li's solid guidance for EV deliveries and strong pipeline for new products in 2024.
Some of those firms also flagged a more optimistic EV margin outlook.
